By Max Hunter
You wouldn’t consider buying a new pair of shoes, a bicycle helmet, or an extra pair of jeans without trying them on first to make certain they fit. After all, a pair of shoes that is two sizes too small will never fit and they amount to money wasted. Shopping for anything – products or services – is pretty much the same. The smart consumer does some research, tries a few on for size and makes sure that the purchase ultimately meets his or her needs in a variety of ways.
Finding the right payday loan to fit your needs is essential. You don’t want to end up paying $50 in loan fees for something you could have gotten for $20 from another lender. And, just as shoes come in all sizes, shapes and colors, there are numerous variables associated with payday loans – items like the amount of time you have to pay back the full amount, the loan fees that are involved, and whether or not the lender will allow you to roll the loan over if you can’t pay it back on time and how much that will cost.
Repayment Times - When you are searching for a payday loan, you need to examine how long the lender allows for the loan to be repaid. Time is a major factor to consider. For example, you just had a major car breakdown and it will cost $500 to fix it. You just got paid last week and don’t get paid again for another 25 days. You have already paid all of your regular bills and have just enough money left to feed your family for the rest of the month until payday rolls around again. You know that you could pay to have the car fixed on your next payday, because you have fewer standing obligations to meet with that check, but in the meantime, you have to get the car repaired immediately so you can get back and forth to work. There are dozens of payday lenders to choose from, but about half of them only loan money for 14 days maximum. That doesn’t do you much good, since your payday is 25 days away. Therefore, you need to consider only those payday lenders who can make loan arrangements extending out 30 days. That gives you time to get your paycheck and pay back the loan on or before the due date.
Loan Cost – A survey of Internet payday loan websites reveals that the average loan cost is $25 per $100 borrowed. At this rate, an individual borrowing $500 would actually pay the lender $625 (the amount loaned, plus loan costs) at the end of the loan period. There are a few sites that advertise loan costs as low as $10 per $100 borrowed, in which case the total cost for borrowing $500 would be $550. However, some lenders disguise their actual fees by quoting a rate per $100 and tacking on an additional fee as well. For example, a fee of $25 per hundred, with a $10 additional fee, actually amounts to $35 per $100 borrowed, for a total cost of $675 for a $500 loan. Borrowers should carefully examine the stated loan costs and any fine print that identifies additional fees carefully before entering into a loan agreement with a lender. Be aware that, if your bank account does not contain sufficient funds when the lender attempts to withdraw the amount you agreed to pay, the lender can also charge bounced check fees, which range from $15 to $30. The good news is that increasing numbers of lenders doing business on the web has resulted in some very competitive payday loan terms being available. But, remember to shop around and find a good fit.
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