Applying for a Payday Loan? Here are Some Mistakes to Avoid
At times, we always find ourselves at a fix that needs an urgent loan. Payday loans have been helpful in such circumstances where your bank, friends, or families can’t lend you the money. However, getting the loan has commitments too, since you have to repay it immediately you get paid your salary. Failure to do so might bring other inconveniences and might land you into trouble. Besides paying on time, you also have to be cautious and avoid making mistakes that others do and regret later. Which are these mistakes?
Below are the top five.
1. Never take the loans for unclear reasons
To take the payday loans, you should have calculated your needs and how you will pay them before the due date. Since their interests are high, you should not take the loans to buy unnecessary things or go for vacations and other luxurious trips. These loans are only for emergencies. According to financial experts, most people who take these loans without an urgent budget end up regretting later since you will pay heavy interest for the money you misused or you didn’t put to any meaningful use. It would help to have the budget first before applying for the loan, and if priorities have changed, it’s better to pay back than to use it for things not planned.
2. Never borrow more than you Need
Payday loans are not free money and do not take as much merely because you are qualified. Always try as much to take the loan as per your needs. If you only wanted $1000 and you can be eligible for $1500, it’s advisable to pick the $1000 and plan how you will repay it on time. Taking more than you need can result in pain in the long run. Why is it so? The money you are borrowing will need to be repaid with interest. According to the lending experts at iCash.ca, payday loan interests rise as you borrow, and they aren’t fixed, as many people purport it to be. Borrowing $1500 will come with more interest than when you stick with $1000. Paying more interest for the money you didn’t plan for can ruin your financial life.
3. Never make late payments
Payday loans have a fixed repayment period, and they must be paid once you get your salary or any other money. If not, depending on salary, it’s advisable to start accumulating funds immediately and, if possible, start repaying the loan before time and complete the payments on or before the due date. Why is it so? Not all lenders have a good reputation for listening to your excuses. Some might end up auctioning your property or sue you if you don’t make payments on time. Besides this, you might end up paying more interest than what was agreed to cater for the late payments. What if I don’t have money on the due date? It is better to contact your lender to decide when and how you will settle your overdue loan.
4. Choosing the lender
Most people fall into any lender without doing due diligence and knowing their reputation and conditions. Loan lenders are not the same, and some may worsen your financial situation by charging more interest. How do you find a fair lender? There are multiple approved ways of doing so, including asking friends and families, reading online reviews, and checking their websites for feedback from clients they have served. It is better to do adequate research before settling on a reputable lender whose interests are manageable.
5. Never provide false information
With people trying to get money with an intention never to pay, some end up providing false identification details to get the payday loan approval. You should never try that since the lenders have access to authentic records and immediately reject your loan if they see any discrepancies in your application form. Besides providing false information, you shouldn’t exaggerate your information or figures to get a higher amount since it will lead to fake impressions, making you not get the loan. It is essential to provide your accurate details, including your ID, bank details, and any other information that will lead you to get the loan. Providing false information might also land you in jail.
Payday loans are for emergencies. If you feel that your need isn’t that urgent, you can wait until payday to cater to your needs. If it’s a must you get the payday loans, try to avoid the above mistakes to get the loan. An important aspect you should note is that you need to pay it on time to avoid fines and penalties. Always contact a reputable lender who will understand your situation.
JR Dominguez is the technology, finance and music editor for MiLLENNiAL. When he's not writing, you can find him day-trading stocks, playing video games, or composing commercial scores.