Payday Loans No Credit Needed
Many people turn to payday loans every day due to a lack of credit. Every now or then you may face yourself with a rough time and you might need some money fast to get through the hard period. One solution to such a problem is the payday loans. These short term loans can get you out of immediate trouble, but you should also know that there are some risks associated to them, Read the following lines to get a better insight into payday loans, how they work, their benefits and their risks.
First of all, you should know what a payday loan is. They are small loans which you can resort to when you face a temporary financial problem. The returning period is very short, usually two or three weeks and the amount of money is small (no greater than $1500). In order to obtain such a payday loan, all you have to do is write a check for that amount of money, plus the afferent fee. You will leave the check with the lender and he will cash it when you can repay, or if obtained online you will provide the lender with your bank routing information and authorize the lender to withdrawal the amount on a certain date. If at the moment of repaying the debt you cannot pay, the loan will roll over. In other words the period in which you must pay it is extended. If you do so, the fees accumulate and the total amount you will have to pay increases.
Because they are meant to save you from immediate financial problem, payday loans are very expensive. The annual percentage rate (APR) can reach several hundred percent. For example, if you borrow $100 for two weeks, you may pay $100 back plus a $20 fee. The Consumer Federation of America researched and reached the conclusion that the medium APR for payday loans is around 426%.
You must be very careful when taking such payday loans. That is because if you have serious financial problems, a payday loan, for its very high percentage rate, can make things worse. For the moment you may need that money, but the payment period is very short and the amount to be repaid is very large and as a long term strategy it can prove very dangerous. Payday loans can prove themselves useful, if, for example, you need the money to quickly repair a car which you use to make profit. If things are really bad and you cannot pay back the written checks, the bounced checks can end up on your ChexSystems file. If so, banks and retailers can see this and may refuse to do business with you in the future.
There are alternative financing options to payday loans. You can build up a reserve fund, in the form of a saving account you can use in times of need. Another thing you can do is to keep an open credit card for unexpected expenses. If you need more money on a constant basis, you can take up a second job. You can also discuss with your creditors to discuss a payment plan or you can choose an overdraft protection plan for your checking account.