There are many, many online payday loan companies to choose from, so where does one begin when looking for a payday loan? A bad idea is to Google ‘payday loan’ then close your eyes and pick a spot on your computer screen. A good idea is to begin by understanding the payday loan process.

 A payday loan is a short term loan with less stringent requirements than traditional, long term loans. They are usually offered with no credit check, no upfront fees, and no down payment. In addition, in most cases, the loan money is available to you within 24 hours.

It’s easy to be tempted when being offered quick cash. However, before deciding whether to take out a payday loan you must be sure that you are capable of repaying the amount you intend to borrow. Sure, you may want $1500, but can you afford to pay $1500 on your next payday, plus a lenders fee?

When you encounter an urgent money situation and you’re confident that you’re capable of responsibly handling a payday loan, it’s important to consider your options. This may take a little time and research. With so many lenders available, this is time well spent for the hassles you save yourself from down the road.

The top 5 factors you should consider when looking for an online payday loan company are:

1. Loan Rates. Online payday loan rates vary tremendously from company to company. While some payday loan companies will charge an affordable and flat rate of 15%, others may charge as high as 50%.

Avoid any payday loan company that does not clearly disclose their rates. If they are unwilling to disclose the loan rate amount to you until you are ready to commit to a loan agreement, beware – these are the companies that often charge hidden fees. When doing your research, keep a calculator nearby, so you can see the actual dollar amount you will be charged based on the loan amount you need.

2.  Loan Terms. The terms of the loan should be considered before choosing a lender. Many payday loan companies require that you repay in full on your next pay date. Others may automatically extend your loan from pay date to pay date unless you indicate you want to pay the balance in full.

If you go with a company who operates using automatic extensions, you must factor in the additional fees that you will be required to pay if you do not pay in full on your original due date. Also consider the costs for companies that offer loan extensions on per request basis. You should know that even though it may be tempting to extend your loan due date, it may not always the smartest thing.

3.  Rules & Regulations. Although the rules may vary from one payday loan company to the next, they are all governed by state and federal laws. Although there is usually no credit check to qualify, there are expectations with some companies.
You should know whether or not you are capable of meeting the payday loan company’s guidelines before you apply. Though most don’t, some companies require a deposit to receive a payday loan, and others do run a credit check.

 4.  Trustworthiness. You should be leery of a payday loan company whose standards are too low. If a company has standards that are too loose it speaks to their trustworthiness. A company that will approve you without any documentation or at least some form of proof of your ability to repay the loan (i.e., a bank statement or a pay stub) is not a very trustworthy company.

Like any lender, the payday loan company you choose should have certain guidelines and a verification process. Companies that don’t are sometimes operating outside of the law or running some kind of scam to get your bank account information.

Predatory lenders will often encourage an applicant to apply for the maximum loan amount. As tempting as it can be, it is financially irresponsible to borrow more money than you can afford to repay. These companies make most of their income off of the additional fees they can charge when your loan is not paid in full per the agreed upon terms.

5. Customer Service. The customer service a company offers is of obvious importance. This is where you will be able to really narrow down your list of possible payday loan companies. When doing your research, call the companies and ask some questions.

The company you choose should be open, honest, willing to answer your questions, and happy to assist you. You should be pleased with the way you’re treated by the company representatives and your ability to contact them, if needed. Beware of lenders that do not have a phone number where you can reach them.

Everyone encounters financial emergencies at one time or another. Sometimes, we simply don’t have the money required to resolve it. A payday loan can be a good solution under these circumstances, but only if you act responsibly. Start by only borrowing an amount you know you can repay and then making an educated decision when choosing your lender. Taking into account the company’s loan rates, terms, rules and regulations, trustworthiness, and customer service will give you clear picture of who you will be dealing with. Using a good payday loan company and promptly repaying your loan is the quickest way to get your situation back on track.
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