5 Questions to Ask Before Getting a Payday Loan

The first option is to get a payday loan only when necessary.

That’s cool, but still, a lot of people face one challenge or the other when it comes to getting an instant payday loan offer; this is mainly because they jumped straight to the application process without first taking some time to ask themselves some simple questions.

So what are these questions, and how would they affect your chances of getting a cash advance loan?

Well, in today’s post, you’ll discover five (5) questions to ask before getting a payday loan; the answers to these questions could help you avoid dangerous mistakes in your next loan deal.

But first…

What is a Payday Loan?

A payday loan is simply a short-term loan taken to pay back on your next payday. These cash advance loans are usually used for emergencies because of their fast processing time (approximately one day/24 hours).

However, due to their short repayment time, they come with slightly higher interest rates than traditional loans. It also requires fewer documents than traditional loans; all you need is proof that you can pay back the loan offer.

When applying for a payday loan, your credit score might be reviewed by your lender and, in turn, updated after your loan deal is completed. Your credit score is a cumulative rating of how you complied in promptness and reliability during your repayment period. But still, this is not a requirement to qualify for the payday loan offer.

Payday loans are often referred to as a no-credit-check loan in the sense that lenders will not consider your current credit rating to qualify you for getting an instant payday loan offer.

5 Questions to Ask Before Getting a Online Payday Loan

The top 5 questions to ask before getting a payday loan include:

1. How much do I need?
2. How much can I apply for at first?
3. Who is the best lender for me in terms of interest rate and repayment period?
4. What documents do I require?
5. What happens if I don’t pay back?

#1. How much do I need?

Loans can be tempting when applying, especially when your salary is enormous. However, you should know that the more you take, the more burden it tells on your salary.

A higher loan amount is good news for the lender since their profit would also increase. They will be willing to give you any amount provided your documents prove that you can payback. But if you get more money than you actually need, you’ll end up using the rest for unnecessary things that were not necessarily planned for. Thus, you need to finalize the exact amount you need.

Sit with your paper and pen and grab a calculator because you’ll be doing some math. Whether it’s a business startup, utility bill, or home repair you want to do with the short-term loan offer, write it down as well as its cost.

Before finalizing the cost of what you want to do with your loan, make sure you do an intensive market survey that keeps affordability and quality in mind.

#2: How much can I apply for at first?

You cannot access a lender’s complete offer at your first loan deal (either as a new customer to your lender or you’re totally new to payday loans). Most lenders will likely give you a limited amount to rate your eligibility for higher amounts.

This limit varies from one lender to the other.

If you’re a newbie, don’t rush to the application form immediately; make sure you confirm how much you can get from a lender first, it will help you reshape your required loan amount or look for another lender whose first-time offer suits your funding need.

To know a lender’s capacity, you can check their official website or ask neighbors who have done similar deals with them.

 

#3: Who is the best lender for me in terms of interest rate and repayment period?

The choice of a lender is almost the most challenging decision to make when getting a cash advance loan. From their terms and conditions to their personality, a wrong lender is capable of ruining your entire online payday loan experience.

Thus, it’s important to choose wisely…

Amongst other factors, the two most significant things to consider when determining your choice of a lender are their interest rate and the repayment period.

The interest rate is the percentage of the whole amount you need to pay alongside the entire loan amount. At the same time, the repayment period involves the total time to complete your repayment (both the initial loan amount and the interest).

When you come across any lender, please take note of their interest rate and the repayment period. Do some math and know the sum of the interest and your loan amount.

If your result is far above your monthly income, you can always find another lender with a lower interest rate. On the other hand, if the repayment period would keep you too pressured or frustrated, find someone else.

Aside from these two factors, learn a bit from the experience of your lender’s past customers. It sometimes contradicts what they wrote about themselves, revealing the truth.

Utilize your smartphone, surf through their reviews and ratings before you finalize.

#4: What documents do I require?

As far as online payday loans are concerned, you don’t need to submit too many documents for your application to be attended to. It is one hedge that instant payday loans have over traditional loans, but you need a few documents, which include the following:

• Evidence of revenue (usually a salary statement for monthly workers or profit and loss statement for business owners).
• A valid means of identification (preferably a voter’s card or National Identity card).
• A working email address through which you can receive information and a bank checking account into which your funds would be disbursed. Make sure the bank account you’re submitting can hold such an amount as your loan amount.

#5: What happens if I don’t pay back?

Yes, you initially had plans of paying back your loan offer, but what if uncertainty occurs?

What happens if you eventually can’t pay back your payday loan offer when it is due is a central question you should ask yourself so that you don’t get taken unawares.

The more you delay your loan repayment, the more interest you accrue. You’ll be given a grace period, but if you stretch it beyond that period, your account may be sent to a collection agency or even get legal action taken up against you.

That is to say that you may be dragged to court or even arrested for defaulting on your payday loan offer.

Conclusion

Your experience with payday loans depends on who your lender is and what he has to offer. If you meet the wrong one, you’ll have the wrong deal and vice versa.

However, the interest rate and repayment period don’t tell it all. Other factors like loan amount and purpose of the loan should be considered.

Even if your lender has the best offer in town, if you use the money for an unreasonable purpose or take an amount you can’t pay back, you may regret it.

After each loan deal, make sure you leave a review on their website to either credit or discredit such a lender. Please make sure you’re sincere when doing this, as it will help other upcoming borrowers to make the right decisions.