Cashing a check or using your debit card to pay for items might not sound like a big deal, but if you’re living paycheck to paycheck, it’s important to make sure you’re managing your money responsibly. Payday loan basics may seem straightforward, but the process can be confusing if this is the first time you’ve applied. There are many variables to consider and if you’re not careful, you could wind up facing costly interest fees or be unable to meet your financial obligations. In order to get the most out of your payday loan experience, here are some tips that can help you better manage this financial decision.
Rates and APRs
When you apply for a payday loan, you’ll have to make a few decisions regarding the loan. You’ll have to decide how much you want to borrow and what your repayment options are. payday loans are based on your pay cycle, so it’s important to consider what your regular pay days are and when you need the money by. Be sure to ask about your repayment options so that you’re clear about the costs of borrowing money for whatever period of time you’re looking at.
Deferment and Rounding Up
When you’re approved for a payday loan, the lender will ask you to agree to pay back the total amount within one to two weeks. This is the standard time frame that lenders allow, but it’s important to consider if you will be able to pay back all of the money in this time frame. If your pay days are every two weeks, then your loan may be due around the same time every month. However, if you’re paid after every two weeks, then you will shorten the time that you have to pay back the money. Some lenders will allow you to “round up” your payment so that it’s due in whole dollar amounts, which can make the process easier. This is something that the lender may be willing to work with you on if you call and ask about it.
Security Deposits
Some payday lenders require a security deposit as collateral while others don’t. If you have a security deposit, it will be held until you’ve made all of your payments on time. This can help ensure that you will pay back the loan successfully and also helps protect the lender in case something unexpected happens. You most likely won’t be able to borrow that amount of money again if you default, but at least you’ll have some money to pay off your balance.
