Payday Loans ? The Legal Loan Sharking Industry

Laws have been created to protect people against "Loan Shark" practices in which short-term loans are given out at excessive interest rates. There is an industry that has come of age the last couple of years that has circumvented these laws. Enter the Payday loan industry.

Payday loans is a some-what new multi-billion dollar industry in which people borrow money to tithe them over until their next payday. These loans also go by the names cash advance loans and paycheck loans. They prey on the lower class that find themselves short of money before a payday.

The one thing to consider when looking into a payday loan is the APR or Annual Percentage Rate that these loans carry. At first glance, you may think paying $240.00 for a loan of $200.00 for two weeks is ok. The A.P.R of this loan comes to a whopping 520%. That is the amount this loan would cost if played over a years time. Compare this with a high interest credit card of 29%. When you see it compared to these numbers, you can see they are not the bargain you first thought it was.

A representative from a payday loan company has agreed to be interviewed for this article on the condition his identity and that of his company be anonymous.

I asked him, how can they can justify such enormous interest charges. His reply was "Because we can. There are loopholes out there that allow us to do this. This is a high risk loan for most cases so we need to charge enough to cover bad loans and to make a profit."

When asked about if payday loans are ever a good idea, his response was "Sure. For example if you will be late on a credit card payment of $70.00 and will be charged a late fee of $30.00 then the APR of the payday loan justifies getting one. You will save points if you get a payday loan and not pay the higher interest rate of the late fee."

When you should get a payday loan:

There are times when payday loans are justified as discussed above. The primary example when your late fees are more expensive than the late fees paid to your creditors.

Another non-tangible justification is when you can avoid getting reported for a late payment. This can be far more expensive than any payday loan fee in that it could affect the cost you pay for future loans. This is especially true if it's your mortgage or car payments.

Yet another reason to get a payday loan is that you determine that the cost is worth it to you personally. If you are headed for the long awaited vacation and could use a few extra bucks to enjoy and can afford the fees then you should look into this.

A final thought on when you should get a payday loan is if you need that cash and it's free. That's right free. There are a many sites out there that charge ZERO interest to all first-time customers. One such site can be found at Low Cost Payday Loans.

What to look for when getting a payday loan:

The first thing to look for is the APR. Federal law has made it so that every lender must disclose the cost of any money borrow through a Truth in Lending Disclosure. This must break down the cost by APR (Annual Percentage Rate). This is the first thing to compare loans by.

Another thing to look for is the length of the term. If two companies charge the same rate for every hundred dollars borrowed but company A has a term of up to four weeks and company B has a term of two weeks, then go for Company A and take advantage of the extra four weeks. The APR of Company A is half of Company B. The reason this differs from the first item is that sometimes they base APR on a fixed amount of time (two-three weeks usually). When you read the fine print that the fee charge is fixed and may allow you to pay it back in a longer term such as four weeks.

The bottom line:

Do your homework when getting a payday loan and look for free to low cost payday loans if possible. The money you save can be substantial. Look for lower cost payday loans and No Fax Payday Loans. These faxless payday loans allow you to apply without needing to submit documentation via fax.

R Vigil
Finance Consultant At
Faxless Payday Loans.

---

Get your Dream Car ? Get a Car Loan

You've probably spent years thinking that your dream car is... Read More

Student Loans Are The Life Preserver Of The Education System

A loan is the reason many students are able to... Read More

Money With The Click of a Mouse

Online payday loans seem to be popping up everywhere. A... Read More

First Time Buyer Mortgage ?Key to your First Home

Living in a rented apartment since long. Ever thought of... Read More

Refinancing Your Auto Loan

Refinancing your loan is one of the best kept secrets... Read More

Finding the Secured Homeowner Loan for You

If you've been thinking of getting a secured homeowner loan,... Read More

Payday Loan and Cash Advance Lenders Online - How To Compare Them

When searching for a payday loan company online to get... Read More

Where to Look for a Cheap Personal Loan

Looking for a cheap personal loan can sometimes be a... Read More

A Little Lesson on Loans

The opportunity to spend money is everywhere. There is no... Read More

Finding a Loan With Bad Credit

No matter what your credit history is the simple fact... Read More

Fast Cash Advance Payday Loans - Convenient to Use Online

Online cash advance companies offer a convenient and speedy application... Read More

Overnight Cash Can Be Yours

It's possible to receive up to 500 dollars cash overnight... Read More

Shopping for a Personal Loan

Most Internet users are now extremely comfortable using the Internet... Read More

Military Loans ? Serving Financial Need of Those who Serve the Country

Military loans are overcoming financial difficulties for army personnel who... Read More

Finding the Loan UK that Meets Your Needs

For those in the market for a loan UK ,... Read More

How To Reduce Your Payments

Are you paying out too much every month for your... Read More

How To Save Money On Car Loans

Have you noticed that everyone seems to have a newer... Read More

Car Loans After Bankruptcy - Tips to Getting Approved

A car loans after a bankruptcy is one way to... Read More

How to Find Bad Credit Loans UK

Bad credit loans UK can sometimes prove quite difficult to... Read More

To Be Mr. and Mrs. Sometimes You Need Wedding Loans

The conception of wedding has changed over the years. Its... Read More

What Is A Payday Loan?

A Payday loan is a small, short-term, high-rate loan. It... Read More

Why Starve Your Needs When Payday Loans are there to Gratify Them

The long awaited paycheque is finally here. However, the reverie... Read More

Simple Tips On Getting Your Loan

So, you want to get a loan?Here are some simple... Read More

Bridge Loans: Everything You Wanted To Know

As the name implies, bridge loans fulfill a vital need... Read More

Should You Get A Pay Check Advance?

At some point in your working life, you may find... Read More

Quick Cash Advance Payday Loan - Get it Free or Cheap

If you are looking at getting a payday loan or... Read More

User Guide to Payday Loan Terminologies

Are you approaching towards a payday loan cash advance? Is... Read More

Title Loans - Get More of the Title to Your Vehicle

Title loans have the same features as a secured loan,... Read More

Guide to Secured Loans

Here is a useful guide to secured loans. A secured... Read More

Guide to Homeowner Loans

Here is a useful guide to Homeowner Loans. A Homeowner... Read More

What is an Auto Loan?

An Auto loan is basically another name for a car... Read More

Taking the Edge Off of Military Motorcycle Loans

So you have decided you want a motorcycle and you... Read More

6 Key Points to Evaluate Online Lenders

The internet is teeming with lenders who are vying for... Read More