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Three Things You Should Know About Payday Loans

Written By emilie dane on Monday, April 1, 2013 | 2:03 PM


There is a high demand for cash advance loans, not only because many people have been forced to take a pay-cut, but also because the majority of people will find themselves in a situation where they are short on cash between pay periods. If this sounds like you, a payday loan can provide the perfect solution to your temporary cash flow problem. While cash advance loans are an easy enough concept to understand, it is still a wise decision to have a thorough understanding of what you are getting yourself into. Many frequently asked questions people have are: What is a payday loan? How can it help me? Who issues the loan?

Payday loans provide short term lending to borrower's who need only a small amount of cash for only a short amount of time. There are many online and in-person lenders to choose from dependent on what you are looking for. Cash advance loans are a fast and easy means to a cash dilemma; it takes only a matter of minutes to complete the application and typically speaking the loan is dispersed into your bank account no later than the following business day. It literally is "cash in minutes." Before you jump in head first, there are three things you should know before taking out your cash advance loan.

1. You should make sure to borrow only from a professionally trusted payday loan lender. While the Internet does provide the convenience of not having to leave your home to find a cash advance loan lender, there are unfortunately scam artists who are privy to the ways of preying on unsuspecting victims. Making sure your cash advance lender is a legitimate company can help protect you from scammers attempting to steal your information. While there are regulations in place to protect consumers from such instances, it is always best to double check and be a little guarded until you are certain.

2. You should have a clear understanding of what rolling over your loan means. If you "rollover" your payday loan, essentially you are extending the period of your loan; this happens most often when a borrower needs additional time to repay their cash advance loan. Again, there are limitations as to how many times you are allowed to rollover your payday loan (these numbers vary by state laws); however, the helpfulness of payday loans is maximized when you configure a repayment plan before taking out the loan so you pay the least interest and carry debt for as short a time possible.

3. You should be well aware of the APR on your cash advance loan. The interest rate on cash advance loans is one of the biggest misunderstandings on this form of lending. APR or Annual Percentage Rate represents the interest configured on a loan based on a yearly (or annual) basis. However, payday loans are meant to be taken out for only two weeks at a time. Reputable lenders will disclose their costs upfront to you as required by law.

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