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What You Should Know Before Taking a Payday Loan
Payday loans have become common recently due to their easy application and fast approval. However, other people have been scammed in the process since they don’t have much knowledge about the payday loan vendors and their requirements.
So, what should anyone know about payday loans before starting the application process?
What to Know About Payday Lending
All payday lenders:
- Must be licensed by the government.
- Show you the maximum amount they charge for the loan.
- Tell you the deadline for loan repayment.
- Tell you the amount of interest they charge on the loan plus the total amount to be repaid.
- Only charge interest on the amount of the unpaid loan.
- Charge a maximum of $15 for each $100 borrowed.
- Not ask for collateral, a guarantor, or credit checks before giving out a loan. However, before loan approval, the lender can ask if you have taken any loan elsewhere and if you have paid the full amount.
- Give you a copy of the agreement after signing it.
- Give you the money instantly if you are in a loan building or within an hour if the loan was applied online.
- Tell you the ways of loan repayment.
- Not give any loan before they are allowed to or else there won’t be any fee charged on the loan that is, the borrower will only pay the amount he/she borrowed.
Therefore, before borrowing any amount for a payday lender, make sure he/she has followed the above requirements. Also, since the amount borrowed differs in amount, it is wise you ask for the total interest to be charged. In case you don’t pay in time, you should always be charged 2.5% interest per month.
Payday Loans: Basic Info
One thing to note is that payday loans charge higher interest than financial banks, credit cards, or even credit unions. Hence, before approval, you must agree to all the agreements stated. Some of the terms of a payday loan include:
- Payday loans should be paid after a short period, usually after 2-4 weeks. However, there are instances where the period might be extended to around two months (62 days). This period cannot be extended since the lender will be forced to charge less interest.
However, if you are applying for the loan for the third time or more for 62 days, the lender must extend the payment plan.
- A payday lender cannot lend you more than half of your net pay per month.
- A payday loan can be canceled. However, the cancellation can only be made within 2 business days after approval. If the 2 business days are over, a borrower can only cancel the loan if the lender has not met the requirements mentioned above.
- A borrower should pay off the loan in a single payment.
- If you don't pay the loan in time, the lender can only contact you from Monday to Saturday starting from 7 am – 9 pm and from 1 pm – 5 pm on Sundays. The lenders can only contact you a maximum of 3 times a week, and they should not bully or threaten you if you haven't paid the loan in time.
- Payday lenders do not operate on legal holidays; hence if the 2 days of cancellation are within the holiday, the cancellation date is extended to the next business day. The lenders are also not allowed to contact you during these holidays.
- The lenders can contact your family members, friends, or even your employer if you are not in touch to get information on how to get in touch with you but not to get information about your pending loan.
- The lender cannot give you a new loan until 7 days after the first loan repayment is over.
Conclusion
Many people have often been scammed when borrowing a loan. Please note that you are not supposed to give any amount to the lender before loan approval. The amount you are required to pay is only the original loan plus the interest.
Also, make sure that the payday lender is licensed to have a smooth loan application and payment process.
Payday loans have become common recently due to their easy application and fast approval. However, other people have been scammed in the process since they don’t have much knowledge about the payday loan vendors and their requirements.
So, what should anyone know about payday loans before starting the application process?
What to Know About Payday Lending
All payday lenders:
- Must be licensed by the government.
- Show you the maximum amount they charge for the loan.
- Tell you the deadline for loan repayment.
- Tell you the amount of interest they charge on the loan plus the total amount to be repaid.
- Only charge interest on the amount of the unpaid loan.
- Charge a maximum of $15 for each $100 borrowed.
- Not ask for collateral, a guarantor, or credit checks before giving out a loan. However, before loan approval, the lender can ask if you have taken any loan elsewhere and if you have paid the full amount.
- Give you a copy of the agreement after signing it.
- Give you the money instantly if you are in a loan building or within an hour if the loan was applied online.
- Tell you the ways of loan repayment.
- Not give any loan before they are allowed to or else there won’t be any fee charged on the loan that is, the borrower will only pay the amount he/she borrowed.
Therefore, before borrowing any amount for a payday lender, make sure he/she has followed the above requirements. Also, since the amount borrowed differs in amount, it is wise you ask for the total interest to be charged. In case you don’t pay in time, you should always be charged 2.5% interest per month.
Payday Loans: Basic Info
One thing to note is that payday loans charge higher interest than financial banks, credit cards, or even credit unions. Hence, before approval, you must agree to all the agreements stated. Some of the terms of a payday loan include:
- Payday loans should be paid after a short period, usually after 2-4 weeks. However, there are instances where the period might be extended to around two months (62 days). This period cannot be extended since the lender will be forced to charge less interest.
However, if you are applying for the loan for the third time or more for 62 days, the lender must extend the payment plan.
- A payday lender cannot lend you more than half of your net pay per month.
- A payday loan can be canceled. However, the cancellation can only be made within 2 business days after approval. If the 2 business days are over, a borrower can only cancel the loan if the lender has not met the requirements mentioned above.
- A borrower should pay off the loan in a single payment.
- If you don't pay the loan in time, the lender can only contact you from Monday to Saturday starting from 7 am – 9 pm and from 1 pm – 5 pm on Sundays. The lenders can only contact you a maximum of 3 times a week, and they should not bully or threaten you if you haven't paid the loan in time.
- Payday lenders do not operate on legal holidays; hence if the 2 days of cancellation are within the holiday, the cancellation date is extended to the next business day. The lenders are also not allowed to contact you during these holidays.
- The lenders can contact your family members, friends, or even your employer if you are not in touch to get information on how to get in touch with you but not to get information about your pending loan.
- The lender cannot give you a new loan until 7 days after the first loan repayment is over.
Conclusion
Many people have often been scammed when borrowing a loan. Please note that you are not supposed to give any amount to the lender before loan approval. The amount you are required to pay is only the original loan plus the interest.
Also, make sure that the payday lender is licensed to have a smooth loan application and payment process.