Mark wants to know how true are the hassle-free terms offered by some online payday loans direct lenders:
“Hi, I just want to ask how come some lenders can advertise hassle-free loans even for people with bad credit like me, while banks wouldn’t even give me a penny chance to borrow money? I’m thinking that if banks are not doing it, there must be some dark secret behind these hassle-free loans that I don’t know about. Would you know what it could be? Are they even legal? Please help me as I’m tempted to get one now after being turned down by lenders because of my bad credit…”
– Mark, 28 from Naperville, IL
As much as we hope to set your hopes high, Mark, finding online payday loans direct lenders with hassle-free terms is like an oasis mirage in the desert. Even in the UK and Canada where these payday loans are popular, most terms are straightforward with high interest rates and stiff penalties. Sure, you’ll find tons of these lenders singing hassle-free to high heavens, but once the music stops and you take a closer look at their terms, their loans are usually more of a hassle than not.
But it’s not to say there are no online payday loans direct lenders offering good terms, especially ones that fit your current credit situation. These fast, instant loans do deliver for people with bad credit scores, or when emergencies force them to borrow cash. Applications can be done online with a couple of clicks and the money is transferred within a day or even faster at times.
But before you plunge in and get excited about an array of online payday loans direct lenders offering good terms, here are six caveats to watch out for that may bring in more problems than solutions to your cash problems.
Be wise to only get the cash you really need. These loans come with hefty interest rates due to their vulnerability. Payday loans are short-term loans, which mean lenders often have a small window to charge interest to your loans; thus, the higher your loan is, the more they get off the interest rates. Many online payday loans direct lenders will be happy to lend you above-the-board principals, especially if they have assessed that you have a stable job enough and your credit score is manageable. Remember, you’re borrowing for an emergency and not to get extra money to buy the latest iPhone.
Check and compare interest rates. While higher-than-average interest rates are to be expected for these loans, some online payday loans direct lenders charge higher than others. A quick search using powerful online loan network sites will help you sort the lenders based on interest rates. Make sure to compare payday loan lenders that provide the same offers and terms so you’re comparing apples to apples and not apples to oranges.
You will be charged more than just the interest rate. Forbes.com did a good computation on how much you may be paying with these types of loans. Service fees, late payment fees, upfront fees, there are a slew of other terms that some online payday loans direct lenders can cook up and serve to an unaware borrower. If you’re not careful, it may give you a heartburn. Your best bet is to go after payday loan lenders that are transparent and are not making hassle-free shout-outs. They’ll tell you about the caveats and benefits upfront.
Read the terms. Here’s a tip: if you feel that the terms are deliberately laid out to confuse you or make it hard to read—small print, confusing layout, buried deep in inside pages, etc.—that can be a clue that the lender may want to discourage you from reading the whole terms. You’re better off checking the next direct lender.
But be careful about terms that seem too good to be true; often, they are. Online payday loans direct lenders are for-profit businesses. Those with straightforward regulations are better than terms that sound they’re out there to give you money for nothing. Strict regulations can mean the lender is a serious player, and that’s the type you want to deal with.
Apart from the interest rates and upfront fees, check the penalties for late payments too. Make sure to compare them and get the best rates available. Be honest with your financial situation; you’re taking this loan because you’re falling short on cash. Which means the likelihood that you’ll be late in paying back is as probable as the sun rising tomorrow. Examin the late payment costs and you’ll be more serious about not spending this loan recklessly and saving to pay it off sooner than later.
No doubt there are serious and honest online payday loans direct lenders. Don’t be discouraged by news like this Financial Times post that the industry is “out of control.” Like in all industries, there are good and bad eggs. Thanks to online loan networks, sorting between the two is now as easy as finding friends in your social network. Similarly, a quick Google search can help you spot potential signs to warn you about a loan shark. Who says only lenders can make background checks?
Payday loans can worsen your financial scenario because of their high interest rate. Check out these smart alternatives to payday loans to get cash for your needs.
Treat hassle-free loans as you would diet pills. Keep in mind the tips above and you’re likely to get the red pill that gives you the real world outside of a fabricated matrix.
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