The payday loan is a style of loan that is much maligned. People tend to focus upon the headline APR and slam it for that. But that ignores the fact that the payday loan is in fact very different from a normal loan, and the APR is not all that useful a comparison.
Instead, you need to understand that there are different factors that need to be compared when you are choosing a loan. Traditional loans may be all about the APR, but for a payday loan, you need to consider these important aspects…
What to Consider When Choosing a Payday Loan
The Cost
No, we don’t mean the APR; look at what it will cost you to borrow it. Often this is very different form the APR, which is focussed more on long length loans. Instead, just look at what actually comes out of your pocket for borrowing that money.
Speed
When you are looking for a payday loan, the odds are you need the money fast. So look at how quickly you can get the cash before you apply. For many companies, it came to be the same day, often within minutes, that you see the money in your account.
Credit check
Some payday loan companies will perform a credit check before deciding whether to give you a loan or not, others will not. If you know your credit isn’t up to it, look at other lenders.
Loan amount
If it is your first time borrowing then many payday loan lenders will put a cap on your first loan, to ensure that you are trustworthy before giving you more cash. Make sure that the first loan amount option is enough for your needs.
Trust
You need to be able to trust the company you are borrowing off. Look around on the web and ask friends for their opinions. You are doing business with the company, so you need to know you can trust them.
