Payday loans and no credit check are tempting alternatives for people who are in a financial bind. Consider a situation where you have something very important that needs to be bought or paid immediately, like a broken stove, car engine breakdown or a water service disconnection notice in your water bill. You don’t have any money on hand right now, but you know the urgent need to have important utilities bought, repaired or checked.
You have an ongoing loan with your bank for just a month now and your emergency fund was pretty much used up when a family member was hospitalized and you covered for the excess in the medical bills. So where do you go? It looks like you just might have to go for a payday loan or no credit check loan.
Before you go and seriously consider having a payday loan or a no credit check loan, there are several things to consider.
1. Payday Loans Have Very High-Interest Rates
Just as the name implies, you are going to borrow money from the lender and on the next payday, you pay the full amount including the 15-25% interest. What if you can’t pay the full amount with interest on your next payday? Payday loan lenders will almost always agree that you roll the loan overpay the interest rate and borrow the same amount of money – which ends badly for the payer. The payer will incur a higher interest rate than ever before as a result.
2. No Credit Check Loans Are Almost Always Dangerous
An article by Jack Riley on the turbopaydayloans.com website states that there is simply no such thing as “no credit check loans”. The credit check is a standard operating procedure for a lending entity in order to determine the loan applicant’s ability to repay. This is something most payday loans don’t do. If you think bypassing the credit check is a good thing, think again. With very high interests, most borrowers of payday loans cannot pay their loans in full and use the rollover option – the interest goes higher with each rollover until the borrower realizes it is too late.
3. Payday Lenders Get Access To Your Bank Account
Payday lenders get access to your bank account and without your knowledge most of the times. Payday lenders use continuous payment authority (CPA) to collect your loan repayments and without you knowing it. This results in further difficulties in managing your finances.
4. You Have The Right To Cancel A Cpa
As a well-informed lender, this is powerful information to counter unauthorized CPAs from payday lenders. You can ask your bank to cancel any unauthorized to your card or account by providing the name of your lender. If your bank makes any CPA transactions after you cancel, these must be refunded to you.
5. Payday Loans Should Be At The Very Bottom Of Your Options
Always think of other options first before seriously considering a payday loan. Exhaust every possible option. If other lenders are not an option due to your low credit score, then why not borrow from a friend or family and arrange a reasonable repayment method with them.
6. Payday Loans Require Very Short Repayment Term
As the loan’s name implies, you need to pay the money you borrowed on the next payday, including the hefty interest. And don’t think of the rollover option as their way of being nice or considerate, it’s just a way of making the most profit out of your loan.
7. Defaulting Your No Credit Check Payday Loan Could Hurt You In Many Ways
For one, it could still affect your credit score in a negative way. The lender may report your late or non-repayment to the major credit bureaus. Once the bureaus will know, the information will go into your credit report. If the lender does not report your negative information to the bureaus, they can sell your unpaid debt to a collection agency. Once sold to the agency, the agency can either report the unpaid debt to credit bureaus or take you to court to reclaim the money you owe them – both could hurt your credit report.
8. Always Ensure You Can Afford To Repay
Putting this as the last must-know item is your silver lining. This is the most important thing to consider when it comes to making loans. Before making that loan, gather information first about the loan amount, the amortization schedule and the amount and your source of repayment. If your budget calculation shows you can pay back, go for it. Otherwise, look for other options.
Payday loans and no credit check loans somehow have a nice ring from them. But be careful and listen again for ominous undertones. The bottom line is when it comes to borrowing money or making a loan, think about the following: your ability to repay, the conditions of your loan repayment and loan repayment options that benefit you. Emergency loans are there to remedy your financial emergency, and not create another one. So, think hard and weigh your options if you want to make a loan.
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