The COVID pandemic left a lot of people in dire financial circumstances, with many people earning half of their previous income. Such a brutal and abrupt loss in income left many people reeling and struggling to rework their budgets.
In such uncertain times, it’s understandable that some people find themselves in a cash crunch. While credit cards can help with the occasional payment, sometimes, they’re not enough. That has left some people wondering, “Should I get a payday loan?”
If you’re considering this option, keep reading for some things you should know before getting a payday loan online.
Do You Get a Regular Paycheck?
One of the questions you’ll answer on any payday loan application is whether you’re employed. If you answer yes, the loan company will typically ask for a one-time authorization to review your bank account.
The loan company will search your history for deposits from an employer. It’s one way they determine if you can repay the loan. If you don’t get a regular paycheck, it’s unlikely you’ll get a loan.
The Interest Rates Can Prove Extremely High
Most types of loans and credit come with fixed interest rates. For example, the average APR for credit cards hovers in the 16% to 23% range. Personal loans range from extremely low rates in the single digits up to rates similar to credit cards, depending on your credit.
Payday loans exist at another level entirely when it comes to interest rates. Even the best online payday loans can come with a 400% APR or higher.
You Typically Pay Twice a Month
You should always read the terms of the loan for specific information, but you usually pay twice a month. It’s called a payday loan for a reason. Most lenders will automatically deduct the payment from your account each payday.
This can often come as a shock to those who typically pay loans once a month.
The Lender Probably Doesn’t Have an Office Near You
Unlike banks that often maintain local branches in your city, online payday loan companies usually don’t have offices nearby. If dealing with a person matters to you, you should look for someone who offers same day payday loans near you.
While you likely won’t find them willing to negotiate terms, it will prove easier if you must make a payment in person.
Should You Get a Payday Loan Online?
Getting a payday loan online can help you out of a one-time cash crunch, but you should consider it carefully.
You’ll pay out a huge amount in interest before you’re done. The company will deduct the payment every two weeks, so there’s no wiggle room. You’ll probably deal with a company that doesn’t maintain an office near you.
You should examine your finances in detail to make sure you can actually afford the payments and still meet your other obligations. Otherwise, your financial situation could deteriorate even more.
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