Selecting the best payday loan for you comes down to a number of factors. You should be sure to consider:
- Price – by considering the daily and annual interest rate. This represents the cost of borrowing and shows you whether you’re applying for a pricey loan.
- How much you can borrow (between $100 to $35,000). Remember, this will be affected by any limits that your state has in place.
- How long you will have to repay (between 1 to 60 months).
- Any hidden or late fees.
- How quickly you can receive the cash, which can be as quick as the same day.
How Can I Compare Payday Loans?
You can do this in a couple of different ways.
- On Foot – You could visit different loan providers’ stores and ask about their terms, but this is time consuming and can be stress inducing if you don’t quickly find what you need.
- Comparison Website – this allows you to compare the cost of borrowing, and all of the factors above. Comparison sites will present this information for you to digest, process and make a decision as a result.
- Broker – Which does all of the work for you. A broker compares everything for you, tailored to you, and finds you the best terms available to you. Brokers will compare direct lenders from across the country so you can be sure that you will only see the best possible deals.
Make Sure They’re Legitimate
This prevents you from falling victim to scams or predatory behavior.
For lenders to be legitimate and trustworthy, they need to be regulated. Don’t worry – such lenders are easy to come across – there are 23,000 in the US!
To check they are regulated, look their details up on the OLA website or SEC register. If they are registered, they will be present on these website’s records.
You should also search the business online to read reviews on websites like TrustPilot, which can help you sift through the many lenders and determine which will provide a smooth experience.
Compare Cost of Borrowing
APR stands for Annual Percentage Rate, which is the interest you pay on your loan over the course of a year. This represents how much your loan costs you for 365 days, but APR is still used to express interest on loans that are taken out for less than a year.
When choosing your loan, you should aim to secure the lowest possible APR. This means that it is cheaper to borrow than loans with high APR. While 18 states such as Illinois have limited APR on payday loans at 36%, the national average still sits at a stonking 396%.
US lenders are required to display APR on any advertisements for loans they issue. You can therefore see their rates on their advertisements, or seek them out on their websites. You could also call them up and ask them about the APR rates attached to their loans.
Comparison websites provide useful guides such as side-by-side comparisons of loans explaining how much and how long you can borrow for and the APR attached to the loan you’re considering.
All of these steps, however, take time, which is why using a broker may be worth your while. They take these steps for you and try and find the best possible loan for you. Some won’t even run a credit check.
What Would I Use A Payday Loan For?
The most common reasons that borrowers request loans for are:
- Urgent household repairs, such as electricity work, plumbing work, or fixing the heating.
- Paying off medical, dental, or veterinarian bills.
- Repairing your car or replacing a car part.
- Paying your rent.
- Covering funeral costs.
All of these costs are urgent, and that is why payday loans are turned to. These loans should not be taken out for frivolous or impulse spending. These costs are also unexpected. You should plan ahead for costs you are expecting, but for those that you don’t see coming your way, lenders and brokers are there to help you through it.