Payday loans come in handy during your financial time of need. In most cases, you find that an emergency situation arises where your expenditure outweighs your resources, and your best bet is getting payday loans direct lender. This article looks at some of the things you need to consider before going to a direct lender for a cash advance.
Defining a payday loan
This particular type of loan is typically short-term borrowing where your financial provider charges you an interest rate based on your monthly income. Payday loans are also known as check advance or cash advance and they are usually unsecured loans, with high interests.
Factors to consider you apply for a payday loan
- Meet the minimum eligibility requirement
For starters, to qualify for a payday loan, according to the Consumer Financial Protection Bureau, borrowers should be 18 years and above, have an active checking account, and lastly, provide proof of their identification and income.
- The amount of money you need
Before borrowing from a direct lender, it’s vital that you have a rough idea of the entire amount you need. Having the exact total amount in mind is usually one of the main factors to consider before applying for a payday loan. It’s worth mentioning however that this particular loan usually has a high interest rate compared to other types of loans. Therefore, it’s usually recommended to apply for a payday loan only when necessary.
- Lenders Interest Rate
The other fundamental thing to consider is the interest rate charged by your payday loan provider. Besides qualifying for a loan, it’s also equally important to know the total interest and annual percentage rates for your loan. Although there are usually government policies and regulations that guide these financial institutions, their rates often vary. It’s therefore advisable to look for a credit provider who has the lowest interest rates with no extra hidden costs.
- Regulated credit provider
Before you borrow from a payday loan provider of your choice, it’s always recommended to do a background check and find out if they are fully compliant with the Financial Conduct Authority. In other words, any payday loan provider who hasn’t registered with the Financial Conduct Authority or isn’t regulated by one is operating illegally.
- The Terms and Conditions
The other factor worth consideration is the terms and conditions of your direct lender. Each particular financial institution has its own governing rules and regulations. It’s therefore advisable to read and understand all the payday loan provider’s terms and conditions before signing any documents. Ask questions where you need clarity to avoid any costly mistakes that might make you a defaulter and negatively affect your credit score.
By considering all the factors mentioned above, you’re definitely guaranteed a payday loan within a short time. However, it’s worth mentioning that this particular loan has a high-interest rate with a short payment time frame. Hopefully, this blog was informative and worthwhile when talking about payday loan application requirements.