Smith Business and Finance

Americans have always been lectured on credit, especially the evils of credit. This lecturing is usually done by consumer groups, charitable organizations, banks and government agencies. Some of these groups are totally divorced from the everyday lives of normal Americans, while others are responsible for running up debts measured in billions of dollars. Sensible Americans have usually taken this advice with caution, and gone on to make informed decisions on their credit needs, taking into account their own circumstances and ability to repay such credit.

Faxless payday loans are now a fact of everyday life. Like all new products on the market, when they began, they attracted a fair share of ‘quick buck’ merchants.  This is inevitable in any emerging market.  But with time, and the emergence of ethical, customer orientated companies, and with State and Federal regulation, this market is now considered mainstream and is used by mainstream Americans.

Online payday loans, as most of the providers explain, are short term small consumer loans.  They are designed for short term cash outflow problems and are not designed for long term loan commitments. Most consumers know this, and treat them accordingly. Looked at in coldly clinical terms, yes, their APR is high, varying from 250% to 500%.  But normal people do not think in APR terms, they think in dollar terms.  They can see that a long term loan at 500% is financial suicide, but they can see that a two week loan at $15 per $100 borrowed is a totally affordable short term solution to a short term problem. If the alternatives are taken into account, bank charges for bounced checks or late payment, embarrassment and damaged credit ratings, then an online payday loan can be looked on as a normal, mainstream option to normal mainstream problems that arise every day.

Unlike the 20th Century loan shark customers, Faxless cash advance customers are considered part of what consumer advocates consider the financial mainstream.  Also, unlike loan sharks, payday companies do not target the poor, jobless vulnerable people.  To qualify for such a loan you must have a job, you must have a minimum monthly income and you must have a checking account in good order, in other words, be part of today’s financial mainstream.  Half such borrowers come from households with incomes between $25,000 and $50,000 a year, according to an industry-funded study conducted by Georgetown University’s Credit Research Center. A quarter make more than $50,000 a year, and a quarter less than $25,000.

These loans are now just one of many credit products available to Americans. Used sensibly, for what they were designed for, they can save you a lot of hassle, embarrassment, protect your credit rating, and indeed can save you money.

With a large number of individuals and families literally living from one paycheck to the next, a great number of payday lenders are offering those who are strapped for cash with a way to borrow against the guarantee of their next paycheck. For many, life’s unexpected problems often result in a cash shortage, utilities being turned off or car payments being late. Luckily for those who are in immediate need of funds, payday loans often provide the answer to an otherwise serious problem.

Below are 10 tips to using payday loans and lenders. As is the case with any loan, carefully consider the company and its reputation before moving ahead with the loan process.

• If at all possible, repay the loan in full during your next payday. This is a better option than the refinancing of payday loans, which will result in additional fees and interest.

• Do not use payday loans for vacations or unnecessary incidentals, such as jewelry or expensive clothes. Instead, payday loans should only be used for necessities, such as doctor visits and medicine, groceries, utilities, fuel, car repairs, etc.

• Before accepting a payday loan from a lender, make sure that you have read and understand the entire contract. Always read the fine print and ask questions about anything that you do not understand before signing on the dotted line.

• When dealing with a payday loan lender, check out their reputation with the Better Business Bureau.

• If you plan to apply for payday loans, make sure to have copies of your most recent paycheck stubs and contact information for your current employer.

• Payday loans are not commonly granted to self-employed individuals because of their unpredictable income. Rather than applying for payday loans, a self-employed individual may wish to consider a secured personal loan.

• If you find that your payday loans have been refinanced multiple times and are becoming unmanageable, consider applying for a credit card that offers 0% APR for 6-12 months or one with a low introductory interest rate. Upon approval and receipt of the card, use the available credit to pay off your payday loan in order to prevent it from continuing to roll over and increase time after time.

• Even if you have poor credit, you may be able to obtain payday loans. The reason is because a credit check is rarely conducted but rather, in the case of payday loans, the more important verification comes in the form of current employment and salary.

• When you apply for payday loans, you may be required to issue a postdated check in the amount of the loan plus fees and interest, which will be cashed on the date of your next paycheck unless the loan is refinanced.

• Because payday loans focus their intended repayment on the date of your next paycheck, you must be able to provide proof of a regular payday schedule from your current employer.