Payday Loan Pitfalls: 3 Things You Should Know
Be ready, though. A payday loan may be easy to get even with a bad credit, but they aren’t as easy after you sign. And, you have other options that don’t come with these payday loan pitfalls.
1 – Watch out! BIG payment ahead!
Your payday lender makes it easy to get the money you need. But, paying it back is a different story. You’ll need the cash to make a large, lump-sum payment that’s due when you get your next paycheck. Unless you are expecting extra cash before your payday, this big payment could be a bit more than you bargained for.
And, if you can’t pay it then, you may be allowed to extend, but even that comes with a price. You’ll pay extra fees or interest to do so. You may need to make a decent-sized payment for the option to extend, too. So, be sure you read all that fine print before you sign with a payday lender.
2 – So many finance charges
The extension to allow you to repay such a loan the pay check after next instead of this one is great, right? Not really if you look at that fine print we mentioned.
First, the contract may be confusing. Some payday lenders will disguise the interest rate as other charges. If you don’t know to read the truth in lending disclosure on your contract, you might not even realize how much you are really paying on the first loan.
Then, to renew your loan, you’ll be charged another finance charge. With some lenders, your paperwork won’t show the total charges from the first loan with those from the second making it hard to understand the true cost of that credit and extension. That happens at every renewal you may need until you are able to fully repay the loan and all of the interest you’ve accrued.
Per the Online Lenders Alliance, a responsible lender will cap the number of times you can renew a loan. If yours doesn’t, you probably need to pay them off as soon as you are able and look to a different lender if you need short-term funds again.
3 – Helping you is not what they do best
With pitfalls 1 and 2, you can see a payday loan can end up causing your short-term cash need to be a longer-term problem. If you have a lump sum coming in to repay the loan, then it’ll work as it should.
For most people, there isn’t a cash windfall coming in a week or two. If you are in this last group, then buyer beware. You could end up in a cycle of debt that buries you in a never-ending need to get another payday loan just to cover bills. And, that is really not the right path for anyone.
You only needed $500 in the first place. It wasn’t ever supposed to get here, right? You never wanted to keep on borrowing with no end in sight.
You’ve got other options.
Payday lending isn’t your only choice when financial institutions say no and your family or friends don’t have the cash to help you out. Even with bad credit or no credit, you can find a loan that is more right-sized to your budget.
At Ascend Loans, we make short-term, small-dollar installment loans. That means you are able to repay what you borrow over time rather than all at once. We amortize your loan over 10 months, making your payments more manageable. Your regular payments are due when you get paid. No need to worry about paying a big lump-sum with Ascend.
We make online loans up to $1,000 to people with bad credit (aka low credit scores), too. Don’t worry that your FICO is low. We don’t even look at any of the reports from the big three credit bureaus when we consider your application. We fit the search of “online loan bad credit” and commit to you that we will be responsible in our loan decision.
Putting you in a cycle of debt is NOT what we are all about at all. Rather, at Ascend Loans we want to help you on the path to financial freedom by providing you the access to credit you need to deal with unexpected expenses. You do need to know that our loan products are expensive. If you have options that come with less cost, we highly recommend that you pursue those first.
We make it easy to reduce the cost. You can reduce the total finance charges you pay by signing-up for auto-pay when you take out a loan, and you can make and additional payment or even pay your loan off early with no prepayment penalties. We’ll also reduce the rate you pay on any future loans you may need so long as you paid your loan as agreed.
If this sounds like the path for you, we invite you to ascend above short-term financial stress with Ascend Loans.
The cash you need. The freedom you deserve.
Loans up to $1,000 – Fast. Secure. Uncomplicated.
Ascend Loans, LLC
635 East Highway 20, U
Upper Lake, CA 95485
Ascend Loans, LLC (“Ascend”) subprime loans are designed to help you meet short-term borrowing needs, such as for car repair, medical care for you or your family, or travel expenses in connection with your job. These loans are an expensive form of credit and are not intended to provide a solution for long-term credit or other financial needs. Alternative forms of credit such as a credit card advance, personal loan, home equity line of credit, and borrowing from a friend or relative may be a less expensive and more suitable source of funding.
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Applications approved with instant funding are typically funded within 30 minutes of signing the loan agreement. Applications approved by 4:00 p.m. pacific time Monday through Friday are typically funded the next business day. Ascend may perform credit checks or otherwise verify the personal and financial information submitted on your application through traditional and alternative credit bureaus. If we are unable to verify your application information electronically, we will perform a manual verification in which you will be asked to provide certain documents. Manual verification may delay your loan decision and, if you are approved, funding. First-time Ascend customers may qualify for a loan of $300 up to $1,000. Customers with good payment history may qualify for subsequent loans at a discounted APR and increased dollar amount not to exceed $2,000. Complete disclosures of APR, fees, and payment terms are set forth in the loan agreement which you should read before you sign and obtain funds. Your loan may be repaid at any time without penalty.
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