Payday loans are short-term loans that are often used to get through a rough spot. However, there ate very few situations in which these loans actually end up being helpful. Before you use one, make sure you understand the cost and risks.
Most often, payday loans are no more than a few hundred bucks and need to be paid back with a couple of weeks. To get these fast loans online in South Africa, You don’t need to have a good credit score or even credit history. Hence it is sometimes marketed as no credit checks.
In this article, we will discuss payday loans in great detail.
How Do PayDay Works?
To get the payday loans, you typically write a check for the amount you are borrowing plus a fee. You might leave the check with the lender and they cash it once you are ready to repay. If you can’t repay your payday loan when it comes due, you sometimes can roll it over so that the loan is extended. You don’t have to repay it but fees keep accumulating. Some states regulate rollovers by outlawing them or limiting the number of times you can renew. Before taking time out a payday loan it is important to review the laws in the state where you live.
Know the cost
In general, payday loans are significantly more expensive than traditional loans. You may end up paying an annual percentage rate(APR) that exceeds 100% several times. For example, you might pay a $20 fee to borrow $100 for two weeks. Depending on all of the terms that calculate to an APR of more than 500%.
What about payday loans from the bank?
Banks have moved into the payday loan industry, most likely in order to earn more revenues. While traditional bank loans that require you to qualify based on your credit, income and assets can be a better alternative, bank payday loans are no better than any other payday loans.
Instead of using a payday loan, you can consider some alternatives such as building up an emergency fund or built credit so you can borrow from the mainstream lenders are some of the best options where you can save your money in a big way. But if you had taken multiple payday loans, then check out here to learn how to pay off multiple payday loans so that you can lead a peaceful life ahead.