Many people see payday loans as a way out of a sticky situation. However, they do not realize that they can create a worse situation than you originally had. Here are some things that you may not have known about a payday loan.
Where you are getting your money
If you apply for a payday loan on the internet, you have no guarantee if your money is coming from the United States. This money may be coming from a foreign country and you may not be one that we deal with on a well meaning basis.
They will cost you a lot more than you expected
Payday loans are high interest loans. Many internet based payday loans could cost you more than twice what you borrowed. If you are late on a payment, that payment can be doubled due to interest.
You could be arrested if you fail to pay
There is a loop hole in payday loans that says if you miss a payment, or you are consecutively late on payments, they can file bad check charges on you. This is a minor offense under normal circumstances. However, if the company is based in a state other than yours, you could be charged with a felony for bad checks over state lines.
Your bank account information may not be safe
There are times that your bank account may not be safe after getting payday loan. Your information my be shared with other companies.
You may receive a surprise payday loan
There have been many reports of people paying off their payday loans, only to receive another deposit shortly after. Many companies add this into their clause that it is allowed. Unfortunately, many people overlook this clause.
Payday loans do not always report to credit agencies
There are a few payday loans that do report to credit agencies. However, not all of them do. If you are attempting to rebuild your credit, this is not the way to go.
The payments are not monthly
The payments are set up the same way your paychecks are. If you get paid weekly, you will have a weekly payment, if you get paid biweekly, you will have a biweekly payment.
They may lead to scam calls
Scam artists find out about everything we do on the net. Applying for a payday loan is no different. Many people report a scam call after they pay off their payday loans. It usually is a call stating that the loan was not paid in full and if a payment of $X is not made by you immediately, you will be charged and arrested.
Many payday loans are not from a reputable company. As a matter of fact, many of them are scams. You give your bank account information, and they take your money, and give you nothing in return. They also will have the power to go back in and get more money unless your account is closed.
Many payday loans allow an extension, or move a payment to the end of your loan. Each time you get an extension it costs approximately $60. Not paying a payment or not having the funds available could cost you an extension cost and a bad check cost of $35 for their inconvenience.
Payments taken a day early
Many lenders go in to your bank account the day before your payment is due. This is because most banks take 24 hours to process a payment. If your bank process them immediately, as most credit unions do, you may be stuck paying a bank fee, an extension fee, and a bad check cost.