Considering A Payday Loan? 3 Things You Need To Know

Are you finding yourself short on money? If you need some coverage until your next paycheck, a payday loan may be an option. Payday loans are short-term loans that are taken out with a payday loan company with payments due on your next pay period. You will be required to provide the lender with access to your bank account, or provide them with a check for the full balance so that the lender can deposit the check when the payment is due. The following are some things to keep in mind about payday loans

They Must Abide By Federal Law

Like any other form of legal lending, payday loans are regulated by the government. They are treated just like any bank loan with regard to disclosing information about the cost of the loan. When taking a payday loan, you will be given the finance charge before you sign the agreement so that you are fully aware of what the loan is going to cost. The cost of the loan will be based on the amount of money you borrow, the current interest rate, and the length of your loan.

Typical Uses For Payday Loans

Anyone with a checking account and a regular source of income will be eligible for a payday loan. These loans are typically used in place of emergency savings for surprise expenses. They are also used to float a balance in the account until the following pay period. You can use the money for almost any purpose, including medical expenses, car payments, and unexpected travel needs.

Drawbacks Of Payday Loans

Payday loans can be a great help when you are in need, but there are some drawbacks you should consider. First of all, they are quite expensive if they are used with any regularity. You should make every effort to pay your loan back on time, or you will face additional penalties. Unpaid loans will also result in bounced check fees at your bank when the lender attempts to cash your pre-written check. This can also result in the loss of your bank account.

While payday loans do not have the best reputation in the world of finance, they do have a place for those who can use them responsibly. Be sure to stay current on your payments and do not overuse these loans. Work towards improving your financial status and finding a loan officer so that payday loans are not always necessary.