Are All Payday Loans the Same?

Not all loans are the same, though the cash you get from the loan is.

The answer is no. Although all payday loans work in the same way, their details may differ greatly. Make sure you read all the lender documents and fine print before finalizing a loan. Check the real interest rate, lending fees and terms. Shop around beforehand before applying. If you don’t, you may end up paying more than what was necessary.

The first thing you need to check is the real interest rate. Make sure you know how much the lender is charging you for the loan. All payday loan lenders charge a high interest rate due to the short term nature and high risk of payday loans. Of course, not all lenders charge the same rates so it’s important to see what rates you’re quoted.

Another detail of payday loans to check and do your homework on before applying is lending fees. Besides interest rates, lenders may charge fees too. Sometimes these fees are calculated as a percentage of the amount you’d like to borrow. Other times it’s a flat fee regardless of the amount borrowed. Find out beforehand if a lender will charge a lending fee. Make sure you combine this with the interest rate charged. In some cases, there may be fees but a lower interest rate.

If you’re confused about some of this, there are numerous payday loan calculators available online. You just need to enter the amount you’d like to borrow and add in the lender fees and interest rate and the calculator will tell you the real interest rate you will be paying on the loan in question. It will show you the interest rate in terms you can better understand, APR. APR stands for annual percentage rate. In addition to the interest rate, some calculators will calculate what you owe when the loan is due. This includes the amount you borrowed plus the interest and fees.

With this knowledge and your homework done, you’re now ready to apply for a payday loan. You can apply with the lender you found that charges the lowest interest rate, or the lowest fees or the lowest of both combined. You may have also found a lender that is a little more lenient with paying back the loan by a certain time or one that sends you your loan funds the fastest.

Not all payday loans are the same. Although the general idea is the same, the small details highlight their differences. Make sure you pay attention to the real interest rate and fees charged by potential lenders of your payday loan. Be knowledgeable about how payday loans work and what policies different lenders have. With all this, you will get the best payday loan for you and feel relieved that you solved your short-term financial problems and did it the best way possible.