Whoever created the online payday loan created a massive profit center for banks, finance company and moneylenders? But these loans can become a nightmare for the naive Internet consumer who becomes bogged down by automatic payments deducted from their checking account on a bi-monthly basis.
These overpriced loans go by several names, online payday loans, online cash advance loans, online check advance loans, online post-dated check loans or online deferred deposit check loans. An online payday loan by any name means high interest rates. These convenient online payday loans come at a very high price.
These loans all have the same impact on the bottom line of the consumer, the interest rate will kill you if you don't handle your loan with care. The online payday loan process involves the following:
1.Provide the online payday loan company a personal check payable to the lender for the amount of the loan plus the fee.
2.The check is post dated until the day of your payday. Usually two weeks from the time you request the loan.
3.The money you request is electronically transferred into your checking account.
4.On your payday, the loan company sends your check through your account.
5.There is an extension for some online payday loans but they will cost you more money.
If you choose to extend your loan, you will pay a few for each time you do this is called a roll over payment. If you choose to do a rollover for $100 loan your fees will jump to 60.00 for borrowing $100. For a prudent buyer, the high interest rate is outrageous but for a desperate consumer trying to make ends meet. The ends may justify the means.
The problem is that once consumers start using these high priced services, they get stuck and cannot get out of the hole except by more borrowing. Getting money this way is the only resource for a vast number of people. The lenders exploit this segment of the population to line their pockets with huge profits. Some of the online payday loan programs charge in excess of 391% APR for these quick convenient online payday loans.
To get out of the quagmire of the online payday loan's clutches do some of the following:
Get a part-time job. This may be an extreme solution but it will prevent the need to borrow money from online payday loan providers at their exorbitant interest rates.
Ask family of friends for a loan and pay them back promptly.
Shop for the cheapest interest rate you can get if you must use an online payday loan.
Monitor your checking account carefully after you apply for one of these online payday loans to make sure they do not abuse your information.
Check to see if your employer has an emergency loan program. It might be embarrassing to ask but you will save a lot of money in the meantime.
You may be able to get overdraft protection on your checking account so you can write a check for the emergency loan at a much lower cost.
These online payday loans can become a habit and an expensive one. Look in your closet to see if you have something to sell. Avoid getting your finances dependent on online payday loans. If you are there, make it a point to get out of the loan as soon as possible.