Online payday loans-Playing safe
1st November: Online payday loans are increasingly rising the popularity charts these days.
But, consumers need to exercise caution in order to avoid falling prey to the traps of several internet payday loan companies and website.
Payday loan–Before proceeding ahead, let us first describe what a payday loan actually is. Well, payday loans are small loans also known by some other names like ‘check advance loans’, ‘cash advance loans’, or deferred deposit check loans.
For getting such loans, consumers are often charged exorbitant fee ranging from anything between $15 to $30 per $100 for an average borrowed amount of $300. A post-dated check is handed over by the borrower to the lender and it is this check that is used by the latter for electronically transferring either the entire amount or the balance from the account of the borrower.
The borrower gets cash after deduction of the lender’s fees. The borrower has the choice of paying the loan back along with a fee in exchange for getting the original check within a week or two when the check(or electronic debt authorization) is with the lender.
Increasing misuse in pay day loans- Online pay day loans are not meant for cash-starved consumers since they include high costs apart from high risk.
A recent survey by CFA states that online pay day loans pose great risk to consumers borrowing money by providing personal information through the internet. In the wake of recent incidents of frauds by online pay day loan companies, the CFA (Consumer Federation of America) has issued warning to consumers using online pay day loans.
Safety guidelines in pay day loans—
• Consumers must borrow only the amount they know they will be able to repay in their next paycheck;
• Choose any payday loan company offering lowest fees and minimum fine.
• Don’t borrow amount based on furnishing a post-dated paper check or electronic access to your saving bank account.
• Don’t ever transmit your bank account numbers or Social Security numbers through fax or internet to unknown companies.
• Keep the due date of payment in mind and make sure to repay the due loan in full and before or on due date.
• Create a budget ahead in time and make sure to set aside some amount for any emergency or unforeseen expenditure.