What is a payday loan?
A payday loan is a short-term cash loan designed to help people out in emergency financial situations. Most loans are due in 2 weeks, or when your next paycheck is earned, hence the name ‘payday loans’.
Will My Credit Be Checked?
Typically, your credit will not be checked by any of the three traditional credit bureaus (Equifax, Transunion, and Experian). However, the payday lender may check with other financial reporting companies.
What occurs if I make a payment late or do not pay back the loan?
You want to avoid both of these situations. If you are late then additional fees will apply (which will vary according to each lenders policies). Legal action may occur if you fail to pay back loan, and the lender may report the non-payment to the consumer reporting agencies.
2. What is the cost of the loan?
Payday loans can be expensive. Because the lender does not require a credit check they are submitting themselves to greater financial risk than a lender would in a traditional loan. Because of this increased risk the payday lender will charge a higher interest rate on the loan.
Please note – the cost you pay for taking out the loan (fees, APR, etc.) will vary according to your application and the lender. The terms will be disclosed during the application process when you are sent to the the specific website of the lender. At that point you will NOT have agreed to the loan. If, after reviewing the rates and terms, you do not find them to be acceptable, then do not sign / agree to the application.
3. What about renewals?
Each lender will have different policies regarding renewals. It’s important to note that some financial institutions might not debit the entire loan amount from your account, which can cause you to incur additional late fees and charges. It is your responsibility to read the lenders renewal process carefully and discuss any questions / problems with the lender.