What is a Payday Loan and Is It Right for You?
Payday cannot come quick enough and it can often feel like the weeks are getting longer between paydays.
You might be tempted to take out a payday loan but what is a payday loan and is it right for you?
Here are some things to consider, according to the Consumer Financial Protection Bureau, a U.S. Government Agency.
A payday loan is a short-term loan that gets paid back with fees on your next payday. It’s often for smaller amounts of money, normally around $500, but could be more or less depending on the use.
Payday loans do not consider if you can meet your financial obligations while you pay back your loan.
They are normally paid with a post-dated cheque or give access to the lender to remove the funds electronically from your account for the full balance, including fees.
If the loan is not repaid on or before the due date, the lender will remove the funds from your account or cash the check.
As with all loans, there are costs involved for borrowing and fees can range from $10-$30 for every $100 borrowed.
Payday loan fees are capped in many states; however, it is best to check out with the lender what their fees are first before taking one out.
In some states, payday lending is not permitted, the Consumer Financial Protection Bureau says. Lenders have decided to forgo business at the interest rate and fees permitted in that state.
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