In the event that an unexpected emergency situation occurs, a short-term, unsecured loan is one way to get cash quickly. Most of these loans come in the form of payday or cash advance loans. You will pay a higher interest rate and may even need to agree to a variable rate of interest. A payday loan is a convenient yet expensive way to borrow money so you need to know what’s involved from the start.
Search online for payday and cash advance companies. Find a company with positive reviews and feedback. Check with the Better Business Bureau for information on a company to help you choose a reputable lender.
Gather together the paperwork you will need to complete a short-term loan application. Have your Social Security number, driver’s license number, paycheck stubs and bank account numbers handy. If you receive Social Security or disability benefits, you will need to refer to your last couple of benefits checks for information.
Enter all the information requested on the application form. Select the dates for your scheduled payments. Generally, payday loans are due on your next payday. Extensions are available, but you pay back much more in interest. Because of their high cost, you should use a payday loan only if you can repay the entire loan balance on your next pay date.
Go over key terms before submitting your application or agreeing to the loan terms. Pay careful attention to the amount you are requesting to finance. Look at the finance charge. This is the amount of interest in dollars that you will be paying. Note the annual percentage rate (APR) you are being charged. Most payday loans require one payment on your next pay date unless you request an extension.
Submit your application and wait for a response. If you are using an online lender, you may be required to fax paperwork for verification purposes. You will need to agree to the loan terms again before your loan is disbursed, which is usually within 24 hours.
Write down the date that your payday loan is due. Your loan will be deposited into your checking or savings account. Likewise, your loan payment will be debited directly from the same account. Make certain that you have enough money in your account on the day that payment of the loan falls due. The Wisconsin Department of Financial Institutions points out that if you pay back the loan in full before the due date, companies that make consumer loans are obligated to return a partial refund of the finance charge.
Contact your local bank or credit union if you need a short-term, unsecured loan and don’t want to go the way of a payday loan. Although it can be difficult to obtain a loan without any type of collateral, some banks will service small, unsecured personal loans. However, this is usually only an option if you have an excellent credit history. Bankrate suggests getting a cash advance from a credit card when you find yourself in a short-term financial bind. While this alternative can cost you from 25 to 30 percent in interest, it’s still a cheaper option than the 500 percent interest some payday lenders charge.
- Don’t ask for more money than you need when applying for a payday loan. The APR for payday loans is extremely high, as an unsecured loan poses a greater risk to the lender. You can easily pay back another 15 to 30 percent in addition to the original amount you borrow.
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.