Understanding The Benefits Of Seeking A Payday Loan

Finance & Money Articles

If you need money immediately for emergency purposes, then you may have few options available to you. This is especially true if you have very little money in the bank and pay day is still a few weeks away. If you are in dire need, then a payday loan may be your best option. This type of loan is a short term loan that will need to be paid back relatively quickly. Otherwise, high interest rates may be tacked onto the loan. While payday loans are often painted in a negative light, there are some positive things about them that you should know.

A Payday Loan May Raise Your Credit Score

If you have poor credit or no credit history at all, then it may be incredibly difficult for you to open a credit card or take out a small loan. This can also stop you from making big purchases like a car or a house. Raising your credit score is one of the only ways that you can acquire a loan, mortgage, or credit card. Credit scores are often not checked when a payday loan is issued. However, the application and the loan itself will end up on your credit report.

Your credit report will include public record, identifying, credit inquiry, and credit account information. Since a payday loan will be considered a loan, it will be listed on your credit report as a trade line or open line of credit. Details that include the loan amount, the date the loan started, the loan balance, and payment history will all be included on the report. The payment history is the important part of the loan reporting that can raise your credit score. If you pay back the loan on time, then the payment history will be favorable. This shows a history of paying a loan on time and this translates into positive or reliable financial behavior. In other words, this will show other lenders that you have a history of paying back loaned money. 

Keep in mind that you should probably not take out a payday loan simply to raise your credit rating though. While a payday loan will not be listed as such on your credit report, the short time frame of the loan may identify the loan as a payday variety. If you take out several of the loans within a short period of time, this may reflect a money flow or money management issue. This can negatively impact your ability to take out a loan in the future. 

Payday Loan Are Regulated

You may be worried by outrageous interest rates if you do not pay back a payday loan as soon as you are supposed to. However, this is likely not true. Many states have regulations in place to protect consumers from predatory lending practices. This means you can expect a high, but reasonable, interest rate to apply to the loan. In some states, like New York and New Jersey, you may see an interest rate that is similar to a credit card. Specifically, these states do not allow interest rates that exceed 25% or 30%. Montana has an interest rate cap set at 36%.

Other states set mandatory minimums for payday loans to give individuals time to pay back the loan without severe penalties. For example, if you live in Oregon, then the payday loan will extend for at least a month. In Colorado, you will have six months to pack back the loan. 

Eighteen states have fairly strict regulations in place when it comes to payday loans. This means that 32 states do not have regulations. However, many payday loan companies must compete with lending companies in regulated states and offer the same sort of reasonable rates. Before getting a payday loan, check your state regulations first and then look around at rates. This will give you a good idea of the types of interest rates that local loan companies should offer, whether the rates are regulated or simply competitive ones.  For more information, consider sites like http://www.paydayexpresscashadvance.com


20 May 2016

Getting My Finances In Order

When I started thinking about my life, I realized that I was spending a lot more money than I should be every month on little extras. I wanted to streamline things, so I decided to start focusing on getting my finances in order. I started looking around my house, and I was pleased to discover that there were more than a few things I could sell for a little extra cash. I put them online, and I was amazed to see how quickly they sold. After selling some things, I was able to get my finances in order, which was a huge relief. This blog is all about getting your finances in order.