Payday loans, precautions and risks
While it is true that macroeconomic data still show a delicate situation in terms of economic recovery, so is that the financial system as a whole has opted to start the economic recovery reopening access to financing.
While Wall Street dragging down the stock markets of the world during the closing months of March to meet the unemployment data in the United States, the banks show they put on their quarterly numbers, a slight increase in the demand for credit and loans private individuals and companies.
One of the forms of loans that have a fast and easy access, are called payday loans.
What are payday loans?
Such loans provide for the possibility of quickly and without red tape, the required funding in exchange for the delivery of a security check for the amount requested plus the APR charged by the lender.
The lender has the check that will cover the loan in full, and the borrower know that the end to repay the loan, the check will be returned.
Caution: easy and very expensive …
Such loans have easily obtained a handicap of vital knowledge, the interest rate applied is much higher than traditional loans.
The analysis of household economy and future projections in terms of solvency and liquidity, are essential before deciding on a funding formula that can turn into a death trap for your credit history.
Very high interest rates and fees much higher amounts than usual, require a thorough analysis prior.
Assess whether the payment may be delayed for a fee, if you have a grace period and, especially, consider other alternatives that are less expensive.
You should know that the average interest rate that applies to this type of loan, exceeds 25%.
Additionally, payday loans, have a deadline to repay the debt very small so the amount of monthly dues is often very high.
Here is an example
You apply for a payday loan of $ 500 to be amortized in 45 days.
The lender will charge a 25% interest rate, so you should make a check for $ 625. This means that interest paid $ 125.
Precautions before applying for a payday loan
Make sure the lender has granted a license for funding
Check on the market offers from other lenders, credit unions exist that have lower APR
Ask only what you can pay on time and the net amounts of fixed salary without unsafe items
Ask for a loan and not only ask for more until they have repaid the first
Gaze at your family budget a contingency or unexpected expenses before establishing their ability to save
What does the law say?
If after taking all the precautions mentioned, you need to access a payday loan, be aware of your rights against the law.
The law requires that within 24 hours to change your mind without having to pay for any concept
Ask for written details of all costs involved in loan
Establish a payment plan and achieve an agreement in writing with the lender
Please be aware that a loan with a new one the same lender may be considered an illegal formula
Conclusions
The payday loans or loans against your paycheck and are also known, are regulated by the DFI, the Department of Financial Institutions. This institution regulates banks, credit unions and individual lenders. Its main function is to protect the customer, receives the complaints and prevent fraud.
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Posted in Payday Loan | 
Tags: access to financing, economy and future, financial system, macroeconomic data, Payday Loans