One of the most popular, albeit, controversial methods people use to make ends meet is the payday loan. Payday loans are cash advances that are usually under $1,000. These unsecured loans normally come with soaring interest rates.
Borrowers apply for payday loans to cover certain payables. These include medical bills, utilities, and rent, among others. Interestingly, around 12 million Americans run to payday lenders every year.
In case you find yourself considering payday loans, you need to choose the right lender carefully.
Continue reading below as we give you some tips and reminders for choosing the best payday lenders.
Finding the Right Lenders for You
There are thousands of payday lenders in the United States alone. Also, there are countless numbers of online payday loans out there. This means there is a big risk of finding a lender that is only out for your money.
Thus, we prepared this quick guide to help you find the best payday lenders. Check out these tips as you begin your search.
Start with the Website
One of the best ways to start your search is through the internet. Hence, you need to look at the websites of different payday lenders. Your goal is to gather all the important information that you can.
The website of a reputable lender must come with all the valuable information regarding their loan offerings. They should also provide their complete contact details. This will help you in case you need to get in touch with the lender any time.
If you see that the website lacks valuable information, you should consider looking for another one. The way the lending company treats its website is a reflection of how serious they are in their business.
Licensed and Certified
Another good tip is to stick to certified lenders. You will likely see the certifications on the lenders’ websites. They tend to use these certifications to attract new clients.
Certification is crucial as it is the lenders’ ticket to provide guarantees.
Next, you need to make sure that the lender comes with a license. This is important considering there are some states that consider payday loans illegal. You may also want to check with the Better Business Bureau in regards to the legitimacy of the lenders.
In addition, it is wise to go for lenders who received accreditation from the Community Financial Services Association of America (CFSA) or the Online Lenders Association (OLA). These accreditations protect clients against fraudulent activities.
Check the Interest Rates
Examining the interest rates is non-negotiable when searching for payday lenders. Generally, payday loans come with steep interest rates. But some lenders charge way too much.
Some borrowers find themselves paying interest rates that are bigger than the actual principal. Thus, you need to find a lender that discloses their interest rates.
Compare the interest rates of the lenders on your shortlist. Find out which ones offer the most competitive rates then trim down your list.
Also, you should familiarize yourself with the laws and limitations in your state. Lenders should follow the maximum and fixed interest rate amounts set by the state. If a lender doesn’t abide by these rules, avoid them at all cost.
Apart from the interest rates, the lenders should also offer transparency in all their other fees. Watch out for hidden fees that may surprise you. How much are the late charges?
Before signing on the dotted line, make sure you go through every page of the contract. Check out the fine print for hidden charges. If there are things that you don’t understand, don’t hesitate to ask questions.
Customer Services Count
A reputable lender should provide exceptional customer services. How do they deal with their customers? Are they able to answer your questions?
Ask the same set of questions to at least three different lenders. Compare the way they communicate with you.
Were they prompt and polite? Did they go the extra mile by offering you other deals and options? If they failed to give you a generally easy time with your inquiries, strike them off your list.
Mind Their Reputation
The reputation of the lenders is another factor you should consider. Start by asking your relatives and circle of friends who applied for a payday loan. Find out their experience with their payday lenders.
Conduct your research by reading various online forums on payday loans. Take note of the companies that offer stellar deals and services. You should also look into the customer feedback the companies receive.
Also, don’t hesitate to ask for referrals from your friends and relatives. These people will point you in the right direction.
Calculate the Cost
Last but not least, you should calculate the cost of the payday loan. Begin by computing how much money you need to get you until the next payday. This should serve as your guide as to how much money you are going to borrow.
Feel free to use an online calculator. This will help you keep track of all the cost. It will guide you in computing for the annual percentage rate.
It will also keep you on top of the hidden fees that may arise during the lending process.
Find the Best Payday Lenders
Payday loans are not bad. The key, however, is to get all the information that you can on the loan. Once you find the right payday lenders, everything should fall into place.
As for the other aspects of your finances, you need to keep on educating yourself. Check out our different articles on personal finance and wealth building. We discuss topics that will help you make wiser financial decisions.