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.

---

Alternative Ways to Avoid Payday Loan

If you spend more than you earn on a regular... Read More

No Credit Check Payday Cash Advance Loan - Benefits to Using a Payday Loan

No Credit Check Payday Cash Advance Loan - Benefits to... Read More

What Is A Payment Protection Plan?

A Payment Protection Plan is an insurance cover you would... Read More

PayDay & Cash Advance Loans Online ? How Do Online Payday Loans Work?

How online payday loans or cash advance loans work? Online... Read More

Secured Loans vs. Unsecured Loans ? Choosing Between the Two Diverse Ends

Often in our search for finance options, we are led... Read More

Getting Good Value Personal Loans

Over recent years, personal loans have become a popular solution... Read More

Industry Regulation and Recent Legislation

A number of states from coast to coast are attempting... Read More

Business Loans: If You Know How To Make Good Use Of Money And Expertise

Are their rewards of being your own boss? Yes, in... Read More

What is a Cash Advance Loan?

A cash advance loan is a short-term loan secured by... Read More

Are Interest Rates Up, Up and Away?

Interest rates have been at their lowest levels in over... Read More

What?s All the Hype about Omni Military Loans?

The average person some time in their adult lives will... Read More

Loans - Good or Bad Debt?

When borrowing money it is usually because we lack the... Read More

Zero Zero Financing on Automobiles in Retrospect

Some say that the automobile industry saved the economy during... Read More

A Guide to UK Secured Homeowner Loans

Trying to find good UK secured homeowner loans might seem... Read More

Get a Low Rate on a Secured Online Loan

Secured loans have become very popular over recent years, with... Read More

How to Spot and Avoid Predatory Lending

Predatory lenders promise loans that are "too good to be... Read More

Bad is the Opposite of Good... Is It? Not with Bad Debt Personal Loans

'Bad' means 'bad' no matter where you go! It is... Read More

No Income Verification Loans ? When Income Doesnt Show on Paychecks

Financial statements, salaries, income proof, documents, paycheck, W-2 forms, 1099's... Read More

Get your Dream Car ? Get a Car Loan

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

Giving Finances a Breather Through Loans for Unemployed

Martin graduated of the college with dreams of a highflying... Read More

Payday Loans And Pawnshops: Comparing Two Popular Ways Of Getting Cash Quickly

I remember years ago growing up when you needed some... Read More

Need a Personal Loan? Have Poor Credit? See if a Payday Loan Would Work For Your Needs

Poor credit and a financial emergency don't seem to mix... Read More

What Are VA Loans?

VA loans are basically mortgages or home loans geared towards... Read More

Cash Advance Company - Comparing Payday Loan Companies Online

Comparing payday loan companies online saves you time and money.... Read More

Guide to Loan Terms

Listed below is a guide to loan terms. It is... Read More

How to Get a Business Loan in Five Steps

Need funds to startup or expand your business? Follow these... Read More

How To Easily Find A Military Loan

Military members the price for serving your country and defending... Read More

Benefits of a Home Owner Loan

There are many benefits for choosing a Home Owner Loan,... Read More

The Truth In Lending Act

With a stated objective to help consumers, Congress deemed it... Read More

What is a Tenant Loan?

Ever wondered what is a Tenant Loan? A tenant loan... Read More

A Guide to Getting a Debt Consolidation Loan UK

If you're getting in over your head with credit, you... Read More

Simple Tips On Getting Your Loan

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

5% Down Vs. 10% Down - A Comparison

It has always been an issue for home buyers to... Read More