Payday Loans Explained by Today’s Movies
When life hands you lemons and you don’t think you can make it til your next paycheck to cover all the bills, it’s good to be reminded that you’re not alone. In fact, according to the American Federation of Labor Organizations, about 40% of the population lives paycheck to paycheck. That means that at least 1 in 3 people are bound to experience a hard hit to their bank account due to unexpected expenses, leaving them in need of extra funds for the month.
Sure it’d be great if you could pick up a few extra shifts at work like Emma Stone’s character Mia did in La La Land in order to make it to the next paycheck. But what if you can’t do that and you need cash like, now?
One great solution to this predicament is a payday loan, which is a small amount of money (typically $500 or less) that you can get quickly, then repay with a chunk of your next paycheck.
Sound like something you might be interested in? Well, there are a few things you should know before deciding to take out this type of loan. We’ve broken it all down into key points that are super easy to remember because they’re comprised of titles from today’s hottest movies. Action!
Payday Loans are Magical like Beauty and the Beast
This kind of loan can be like a dream come true because the qualifications are based on different criteria. Don’t have the greatest track record? Neither did the Beast but in the end, Belle accepted him just as he was. Similarly, payday loan lenders tend to care little about your credit history because they will recoup their money from your next paycheck. So even people with bad credit may qualify for payday loans.
So what do payday loan lenders care about? For starters, they want to make sure you have a steady income, so they’ll likely check that you’ve had your job for a little while. They’ll also get your checking account routing number so that they can easily claim what’s theirs come pay day.
They might also request a dated check (likely the date of your next pay check) from you either in place of, or in addition to your checking account information. They do this to cover their bases when it comes time to collect on the loan. The average length of a payday loan is about 2 weeks because most folks are paid every 2 weeks.
Bottom line: once you square away the details of the transaction, you get cash you need. It doesn’t get much more “magical” than that.
Watch Out for Those Hidden Figures
The convenience of getting quick cash doesn’t come without added fees. A quick online search can tell you what the lending fee is for the state you are living in.
The smartest thing you can do is to pay it all off at once, otherwise you could get hit with additional fees. In reality, payday loans are not meant to be paid off over a long period, they’re meant to be a short-term solution.
While it’s great to have the option of using an installment plan (payments broken into smaller chunks that are paid over several months), just be sure you can actually afford to do so, because otherwise you could end up parting with huge chunks of not just one but many of your paychecks.
A quick breakdown of the fees:
Regular – these are the fees that the lender charges up front to disburse the loan.
Rollover/Renewal – in the event that you don’t pay off the loan + fee off completely, you can be charged an extra amount every month until you pay off the loan.
Hidden – fees that many lenders won’t necessarily tell you about which are added on top of the renewal fee, such as a bank penalty fee.
There are advantageous lenders out there who will do whatever they can to nickel and dime you. The golden rule for payday loans is that you should pay them off immediately after you get your next paycheck but if you know you won’t be able to, be sure to ask about penalty fees so that you don’t experience any wallet-draining surprises.
When a Lender Seems Shady, Get Out!
It is important to make sure the company you are working with is abiding by the law and approved by the CFPB (Consumer Financial Protection Bureau). If not, you could be in for a world of trouble. Know exactly what you’re getting yourself into when you sign up for a payday loan. Don’t be lured into dangerous territory. Like Chris from this year’s chilling horror film Get Out. Do your homework and look up the lender. You want to make sure they’re registered and approved by the state they are operating in. (more on this below).
Also, trust your gut. If you feel that something’s fishy or doesn’t add up when you’re communicating with a lender, then run for the hills!
Partner with the Best Lender: the Robin to your Batman
Both parties are looking to get a quick buck. So why not help each other out and work together to do so? A good lender will be clear about their terms. He will be the Robin to your Batman by helping you get what you need to succeed.
A good Robin is also trustworthy. Would you give your checking account and routing numbers to just anyone? Nope. So when it comes to trusting a lender with this sensitive information, you can never be too careful.
Whether you go with a company located within a physical building or look for payday loans online, the choice is yours. It might be more comforting to talk to someone in person. However don’t let your fear of obtaining loans via the internet keep you away from exploring your options online. You might find better options online than you would otherwise!
Shopping for a Payday Loan Online
Shopping for a payday loan online eliminates having to book an appointment. You won’t wait in line. On top of that, the drive time is zero. There’s such a large breadth of lenders online that sky is the sole limit in terms of choices. Upon digging a little deeper into your options, you’ll find that there are some payday lenders who do not charge any rollover fees. They give you more flexibility to extend your payment plan. You may even find lenders that suit your unique needs. For instance, those who grant payday loans to freelancers and people who are self employed. As well as lenders who specialize in lending to veterans of the United States military.
When life hands you lemons and lemonade just won’t get the bills paid, it’s good to know you have options. Get the extra funds you need but be smart about it. Being conscientious about borrowing money will serve you well now and for years to come.
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