How to Find the Best Payday Loan Rates
Borrowers looking to seek payday loans should exercise extreme caution in understanding payday loan rates offered by the lender. Payday loans are not Santa’s goodies and come at a stiff price. Typically, the borrower gets to use the payday loan for a period of 15 days and this costs anywhere from $10 to $30 for every $100 dollars that you borrow. In annualized terms the effective payday loan rates that you suffer translates to a whooping 650% or more depending on the exact amount charged to your loan. These figures should make it easier for you to understand the importance of critically analyzing the payday loan rates that are offered to you.
If you are considering payday loan rates from online vendors, you should also take a look at some of the terms of contract that often tends to be one sided. With just a mouse click you are often agreeing not to hoist class action suits against the lender, agree to mandatory arbitration, agreements signifying your consent not to file for bankruptcy, and similar terms which are equally or more overwhelming. In practice however, most borrowers overlook these conditions in their anxiety to tide over that moment of financial mess. When the loan is not repaid on the appointed date, the lender simply claims the fees for the month and rolls the loan over, dealing another blow to your depleting resources. Inadequate understanding of payday loan rates can thus wreak havoc to your financial health.
In the United States of America, the payday loan industry and the associated payday loan rates, are regulated by law in 37 states. 15 states either prohibit the practice or the state law renders the business unfeasible given the complexities of the law.
A recent survey by the Consumer Federation of America (CFA) has found that payday loan rates typically go up to $30 per hundred that is borrowed and the more popular loan amount was $500 or lesser. Renewal of the loan by paying the fees for a month was sighted as a major cause of borrowers walking into a debt trap. Another interesting revelation from the survey points to only 38 websites disclosing payday loan rates as annual interest rates to customers before they complete an application process. Another 57 web sites meekly mentioned just the finance charges.
While these constitute some of the hard facts on payday loan rates, on the flip side there is a great amount of ease with which you can access this type of loan. In most cases, there is little or no paper work and the lenders are not concerned about your credit score. This is also by far the major reason why payday loans are so popular across the nation.