Payday loans are a form of short-term loan that requires borrowers to pay back the lent sum when they receive their next paycheck.
Borrowers can often obtain a short-term loan either online or at a brick-and-mortar location. Payday loans are often appealing because they are quick, easy to get, and don’t usually require a good credit score. In fact, many payday loans have no credit requirements.
While these loans are easy to get, they aren’t always easy to pay off. Unlike installment loans, which allow you to pay back the loan one chunk at a time over a longer period, the entire payday loan, including interest and any associated fees, is due when the borrower receives his or her next paycheck, which is often within a couple of weeks of receiving the loan. Additionally, payday loans often have high interest rates and expensive late fees.
Do’s And Don’ts of Payday Loans
Payday loans can be a useful tool if you are facing a one-time emergency and payday is just a few too many days away. However, if you won’t have enough cash to pay back the loan and handle the rest of your expenses when you get your next paycheck, payday loans can leave you in a worse place that you started.
Follow these do’s and don’ts to protect yourself from a cycle of payday loan debt.
Do:
- Research the company before giving out any private information to avoid scams.
- Read the fine print.
- Ask about interest rates and fees.
- Set a budget for the loan money.
- Bring proof of income and employment.
- Pay back the loan as soon as you get your paycheck.
Don’t:
- Borrow more than you need and can afford to pay back with your next paycheck.
- Provide false information; credible companies will verify the info you give them anyway.
- Use payday loans to address long-term needs.
- Pay late; you’ll likely incur additional charges, and it can show up on your credit report.
How to Avoid Online Loan Scams
When applying for online payday loans in Utah, it’s important to be able to distinguish between a legitimate company and a scam. If you aren’t careful, you could end up losing money or suffer identity theft.
The following warning signs should serve as red flags. Not every warning sign means that the company is definitely a scam, but you should at the very least do more research and proceed with caution.
Warning signs:
- The lender requires you to pay a tax, fee, or other charges before they’ll give you the loan.
- The website or emails you receive from the company contain many spelling and grammatical errors.
- The company offers interest rates that are significantly lower than every other lender.
- The website URL is misspelled or does not match the company name.
Stay smart and stay safe. Never give away your personal information like your social security number, credit card information, driver’s license, or bank account details without verifying the legitimacy of the company.
If you have any questions, or if you would like more information about online loans in Utah, contact us today.
