America’s millions struggle to make ends meet. First National Bank of Omaha conducted a survey earlier this year and found that 49% of U.S. adults expected to live paycheck to paycheck in 2020. The situation is getting worse, and it’s not surprising. Pew estimates that almost 12 million Americans use payday loan each year.
If you require quick cash, payday loans are a good option. You will usually only need to provide proof of income to get a small loan. These loans can be costly and have high interest rates. These loans are often made available to those who are financially disadvantaged and don’t have any other options. You can use Bridge Payday for more loan offers.
The ACLU regards payday lending as predatory lending. Many states are currently considering laws that would set interest rates caps and other regulations governing the maximum loan amounts lenders can charge. Nebraska recently adopted legislation to lower the interest-rate cap. The previous limit was 400%. It has been reduced to 36%. Although 36% is higher than the average credit-card rate, it is a substantial improvement for many borrowers who are struggling to repay these loans.
How do payday loans work
Many people prefer applying in person for a cash advance. To complete your application, you will need to have your most recent pay slips. Payday loans may be secured or you could use your income as collateral. They might also be allowed to garnish your wages if you fail pay the loan back.
If you have a good credit rating, the lender will review your credit file to make a decision.
You usually have 30 days to repay the loan plus any finance fees once you receive your money. This is significantly more than an installment loan that is paid over several months or even years.
Payday loans and their dangers
While payday loans can make it easy to borrow money quickly and are a great way to do so, the interest rates for these loans can be very high. The law doesn’t require lenders to verify that you are able to pay these high interest finance charges and fees.
Failure to pay the loan on time can lead to serious consequences. The amount of the loan and your location can impact the fees and charges. A short-term loan for less than 100 dollars may result in you being charged up to 500% interest. If the balance is not paid off, the interest will continue to increase.
Worse yet, payday loans secured with your pay check may allow you to give lenders permission for garnishment of wages. It can be difficult to get ahead.
There are other options for payday loans
Payday loans are best avoided. Look into lower-interest alternatives. These could include borrowing money to your relatives and repaying them or taking out personal loans. You might also be able to negotiate a payment plan with your debtor.
If none of these options are available, you can still use your credit cards by either using it to swipe it (which is usually charged between 5%-5%) or getting cash advances. While credit cards might have the highest interest rates available, they are still much more affordable than payday advances that you don’t have the means to pay.
Your credit rating may be protected even if you don’t pay off your entire credit card debt. You can do this by paying only the minimum amount, until your finances improve.