Payday Loans

Payday loans are often the last choice for those who face shortage of cash. Typically, if you need funds, you will call your family for help. Unfortunately, because of the economic crisis, our families face financial problems as often as we do. Because of that, you often won’t see help from your siblings or parents. Some people have it even worse – sometimes a person will be living alone. His or her family could have died or maybe they don’t want to have any relations with a given human.

So if you are in a similiar situation, please read those 5 tips which will help you to get the best payday loan available. You will also know what to avoid and what to look for.

1) Payday loans can have a really enormous APR (annual interest rate).

There are known cases when a loan will have more than 300% of interest rate, when measured on an annual basis. This one number can scare many people away. And probably because of those high APR, payday loans are considered to be usury. So should you engage in such lending if you will probably go bankrupt in case of late payments?

                                                                         ( A simple financial simulation showing exactly how much will you have to repay on a hundredth dollars loan. )

The thing is that payday loans almost always have a fixed interest rate. The enormous APR arises because this kind of loans are meant to be paid back as short as 2 weeks after taking them. That means if you take $100, you have pay back $15. If you extrapolate this to a yearly interest rate, the values will be enormous. But if you consider that you have only pay $15 of interest on each 100 dollars, it can be a great offer.

2) To get a payday loan, you need to have a stable source of income.

Loans are always given out so they will be paid back in the future, with interest. Do not expect that some bank will award you money only because you appear to be in need or you are a good human being. What you need to show them is a good credit history (that means paying your liabilities on time and in full amount) and a stable source of income. You can earn $500 monthly but if it is a stable career, your application will be accepted successfully.

3) You have to be an adult.

This point doesn’t need a further explaination. If you are not yet 18 years old, you will be for sure rejected. It is against the law to lend money to teenagers and children.

4) You have to have a checking account.

Even if there are some local offices handing money to your hand, if you want to borrow online, you need to have a checking account. It will be used to both send you money and repay your money to your lender. If you do not have a checking account yet, please contact a local bank or try to make an account online. Nowadays this process is completed in 10 minutes at max.

5) Having a collateral goes long ways.

If you have your own home ( you are not renting it ) or your own car, your value will increase. What you need to know is that lenders are treating each of their potential customers as a probabilities of default. That means if you have a low income, your probability of default will increase. If you own your own house and car, the loan is secured by them. In case of your bankruptcy, those items can be used as a repayment for the lender. From our experience, having a car gives you +40% bonus when applying for a payday loan.

I hope that this article was helpful. It was written in collaboration with many of our readers. If you have any suggestions feel free to email me (jake@getaloana.com). In the next article I will respond to any of your questions.

Best regards,

Jake Randal

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