Do you know, every year, 12 million Americans use payday loans (also known as microloans) to cover their monthly financial issues, and they pay more than $9 billion in loan costs?
According to the most recent statistics on payday loans in the US, short-term payday loans are used by borrowers from all population and regions of the country.
On average, loan borrowers undergo 5 months of debt in a year, mainly because of short-term cash loans. However, the average borrower earns around $30,000 per year, still nearly 58% of them find it hard to meet their monthly expenditure goals.
Things to consider before you apply
As this cash loan, based on the borrower’s check has a shorter period, interest rates can be higher than normal private loans. Somewhere, the interest rate is between 15%-20%, depending on the lender, but could be higher. However, the required documents are similarly like a personal loan.
Most companies maintain interest rates that match your credit profile and needs. In most cases, interest rates of payday loans are between 0.08-2% per day. This is more than the interest rate on personal loans and credit cards.
Make sure the company is genuine and reliable before sending personal data to the lender and collecting money on the date of payment. Some companies charge fees for processing the payday loans, which can range between Rs 150/- to Rs 5,000/- per application. Periodically it can be up to 2% of the loan amount.
Must check late payment fees before you take out a loan on the day of payment. Some companies don’t charge, while others charge interest up to 4% per day for delayed payments.
A payday loan is an excellent choice for salaried people to pay because it can be borrowed directly from the lender. This is based on one’s income and credit profile. If you are planning for the small loans, this might be a sounder choice than a personal loan.