Payday loans can be a helpful way to get quick cash when you need it, but they can also be a trap. If you’re not careful, you may find yourself paying sky-high interest rates and fees. When you are in a financial bind, it can be tempting to look for any source of funds to get you through to your next paycheck. However, you should be aware of the dangers of online payday loans before you consider using one of these services. Payday loans are typically small, short-term loans that are due on your next payday. They are easy to qualify for and can be a quick way to get cash when you need it. However, they also come with high fees and interest rates, which can make them very expensive. Here are some things to watch out for so you can avoid the pitfalls of online payday loans.
- Watch out for high interest rates.
Payday loans typically have very high interest rates, sometimes as much as 700% APR. That means if you take out a $100 loan, you could end up paying back $700 in interest and fees. To avoid this, always shop around for the best rates and terms.
- Beware of hidden fees.
Many best online payday loans lenders charge hidden fees, such as application fees, processing fees, and early repayment fees. These fees can add up quickly, so be sure to ask about them before you apply for a loan.
- Make sure you can repay the loan.
Payday loans are typically due on your next payday, so make sure you’ll have the cash to repay the loan when it’s due. If you can’t, you may have to extend the loan, which will result in additional fees.
- Avoid renewing the loan.
If you can’t repay a payday loan when it’s due, you may be tempted to renew the loan by taking out another one. But each time you renew the loan, you’ll have to pay additional fees. If you find yourself renewing your loan over and over, it’s probably time to seek help from a credit counselor.
- Know your rights.
Under federal law, you have the right to cancel a payday loan within 24 hours of taking it out. And, you can’t be required to pay more than the amount you borrowed, plus interest and fees. If you think a lender has violated your rights, you can file a complaint with the Consumer Financial Protection Bureau.
Conclusion:
Payday loans can be helpful in a pinch, but they can also be very costly. To avoid the pitfalls of online payday loans, watch out for high interest rates, hidden fees, and make sure you can repay the loan before you take it out.
