Many people prefer payday loans because this method allows you to get cash immediately. However, it is worth noting that if you want fast cash, payday loans are not your best option. Because this kind of loan usually has the following disadvantages, the following will tell you about it, hoping to give you some inspiration when you want to borrow money on the payday next time.
High-interest rate
You know what? If you borrow money on payday, people will often charge you higher interest. But many people may not realize that the interest rate is very high, because the loan is often very short, usually only about two weeks, so people do not realize how high the interest rate of two weeks can be. However, if you calculate the interest rate of two weeks in a year, you will be surprised to find that the interest rate is so high, and most of the time, You have virtually paid the interest rate of a payday loan, more or less.
This loan usually will pay more than three times the APR as the payday loan. Compared with other types of loans on the market, the interest rate of this loan is relatively high. If you take out a loan on payday, the interest rate you pay will be far more than the benefits you deserve. Think again, is it really worth it? It delivers 250% more interest than other types of loans just to save a few days. If it is not in an extraordinary emergency, it is really not cost-effective.
Cost
In addition to the high-interest rate I mentioned above, you will often be charged a high fee if you choose a payday loan. In addition to the application fee, setup fee, and processing fee, you need to pay some other expenses related to the loan. In particular, if you do not pay when due, the late fees you should pay will become very high. In some extreme cases, the late fees you need to bear may even exceed the total amount of your initial loan. Therefore, before you make a loan, please read the relevant materials or seek professional advice to understand the fees you will pay in the future. Otherwise, after the loan starts, you will become unprepared for so many expenses.
Advance payment penalty
In addition to the above general situations, there is also an extraordinary situation that deserves to be emphasized: advance payment fines can be charged for payday loans. In this case, if you want to prepay on the specified date, they will charge you a fine. This is because it is to prevent you from prepaying so as to avoid interest, so it means that you can only repay at the specified time or pay part of the fine. If it is used for larger loans, this situation is acceptable, such as housing mortgage loans. However, if it is used for short-term loans, such as only a few weeks, the rule of prepayment seems to be squeezed. So you should try to avoid it. You should remember that you need to own the right to repay at any time, rather than being restricted by these stupid rules or even incurring fines.
