Questions to Ask When Choosing Between Payday Loan Lenders

Sometimes it is impossible to pay all your bills before your next paycheck arrives. Or, you may need quick access to extra funds to cover an unforeseen financial emergency. If payday loans are used wisely, they can be a useful way of borrowing a relatively small sum of money for a short period of time. However, it is important to choose a legitimate, reliable, and fair payday loan lender. Here are some questions to ask when choosing between lenders.

Are Payday Loans Legal in Your State?

Payday loans are currently legal in 32 US states. If you live in one of the other 18 states or the District of Columbia (DC), you will not be able to obtain a payday loan and online lenders based in other states will not be allowed to offer them in your state.

Does the Lender Have a State License?

It is important to choose a legitimate lender with a state license. Also ensure that the lender’s license is up-to-date. Do not borrow from a lender with an expired license.

If a company displays a copy of its license on its website, always double-check this information by calling your state’s regulator of financial institutions. A list of the regulators in each state can be found on the website of the Consumer Financial Protection Bureau (CFPB).

Is the Interest Rate Reasonable?

Payday loan lenders charge higher rates of interest than banks because of the higher risks involved in offering unsecured loans. However, the interest rates charged by some lenders are extremely high. Therefore, it is important to choose a lender with a more reasonable rate of interest.

A reasonable rate of interest for a payday loan could be considered to be an annual percentage rate (APR) of between 400 percent and 500 percent, although it may be possible to obtain a lower rate than this.

Under the federal Truth in Lending Act, the payday loan company has to give you written details of the APR that you will be charged before you take out a loan.

Are There Extra Fees or Hidden Charges?

Some payday loan companies impose a finance charge in addition to interest. It is important to find out how much this finance charge will be. Some lenders may also impose other charges. Read the small print carefully to find out if any “hidden” charges are likely to apply to you.

Can You Afford to Repay Your Loan on Payday?

Before borrowing a certain amount of money, ask yourself if you will be able to afford to repay it on your next payday, together with the interest and fees. Be aware that extra interest and fees will be applied if you have to extend your payday loan or take out another one before your next payday.

Ask all these questions before choosing a payday lender to ensure that you borrow money from a legitimate business that will charge you a reasonable rate of interest and will not impose excessive extra charges

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Payday Consumer Notice:

APR

The APR of a payday loan varies in each state and depends on the lender, the advance amount, fees and terms of the transaction. The APR in our network of lenders can range from 265.36% to more than 700% on 14 day terms.

Implications of non-payment

Implications of non-payment vary from lender to lender and by state regulations. If you are unable to repay your loan you may have one or all of the consequences listed below depending upon the terms of your lender. Fees may include but are not limited to: insufficient fund fees, administrative fees, late fees, non-payment fees, court costs and legal fees.

Collection Practices, Credit Score Impact

Payday Loans are due and payable in full in one payment at the end of the loan term, unless the Lender offers renewals or other repayment options. Make sure to review the terms and conditions of your lender if you fail to pay on time.

  • Late payments of loans may result in additional fees or collection activities, or both. Each Lender has their own terms and conditions, please review their policies for further information.
  • Non-payment of credit could result in collection activities and your account could be turned over to a collection agency. Each Lender has their own terms and conditions, please review their policies for further information.
  • Failure to pay your loan on time could result in your lender reporting the delinquency to a credit reporting agency. This could result in the lowering of your credit score which could make borrowing more expensive in the future.

Renewal Policy

Renewal policies vary not only by lender but also by state regulations. Every Lender has their own renewal policy, which may differ from Lender to Lender. Renewal fees vary by lender. Please review your state regulations and you lender's renewal policy, terms and conditions.