With increased demand for payday loans due to financial conditions there appears to have been an increase in the number of payday loan providers. Not all payday loans are the same. With all the different features or conditions it is easy to get confused. This article will try to help you work out which payday loan is right for you.
Issues you might consider include:
Costs Loan amounts Subsequent loan amounts How long does the process take? Confirmation of income and other details How are the funds delivered? How are loan repayments made?
To help with your analysis you need to make a simple comparison table. You can use a sheet of paper or a spreadsheet. List the main features or issues in the first column and then at the top of the next columns add the names of your chosen payday loan providers.
To help you consider the important issues, the following points appraise the major points of difference between the various providers.
Costs
The types of fees charged by providers come in various forms and names. Typically there is a set figure for arranging the loan, often a fee per nominal amount borrowed (i.e.: $25 per $100 borrowed) and interest fees. There will also be overdue payment fees.
Loan Amounts
Payday loan providers try to lessen the risk of borrowers not making repayments. It is not uncommon for initial loans to be at a lower level. This means that whilst they might market loan amounts of $1,500 or more, the initial loan can be a fraction of that amount. You will need to find this out before wasting your time applying.
After you have repaid your first loan, the provider may increase the maximum loan amount subject to their lending criteria.
How long does the loan process take?
Typically the loan process can be split into to three phases. The first is the application stage where you provide all the details required for them to make a decision on whether to make you an offer and how much. Online application forms facilitate this process and it should not take longer than 15 minutes.
The second stage is where you provide proof of the details you have provided; such as your income, bank account and employment situation. They may require you to fax bank account statements or pay slips to them or alternatively scan and email. Some will ask you to let them actually call your payroll office which can speed things up. This stage will take as long as it takes for you to provide the information required.
The third stage is the provision of funds to you. Some providers make a physical deposit by hand whilst others make inter-bank payments over the internet. A physical deposit into your account takes less than an hour whilst interbank transfers will be overnight.
If you need the money fast then a provider that makes the deposit by hand will usually be faster.
Repayments
Most providers will setup an automatic withdrawal from your bank account into which your pay goes, on the day you get paid.
Making a decision
Once you have gathered all the information into your payday loan comparison table, you can go through it to methodically work out which one suits your needs the best. A simple way to work out which is best is to circle or highlight the best provider for each issue (i.e.: cost, speed or loan maximum). Also put a cross through anything that definitely will not meet your needs. The provider that has the most circles without any crosses may just be the right one for your needs.
