Payday lenders don’t dwell on a client’s credit score and can deposit the cash into your account within a few hours. Sounds fascinating, right? But, what’s the catch? Most people tend to think that they know the secrets of payday loans. However, what they know if often only the tip of the iceberg.
Loan shark companies provide small size loans ranging from $50 to $1000 and charge extremely high interest rates. The annual percentage rate of a payday loan ranges from 200% to 500%. When compared to credit card loans that have an APR that ranges from 12% to 30%, this interest is crazy high and one of the secrets of payday loans that lenders don’t want you to know.
Payment is due on your next payday
In addition to exorbitant interest rates, payday loans must be paid in full on the borrower’s payday. As a result, borrowers are likely to take sequential loans in order to cater for daily expenses. Moreover, there are additional fees for every renewal and possible negative effects on your credit rating.
Above the law
Unless you understand the secrets of payday loans, they can turn out to be a big mess. Not all payday lenders are the same. A majority of loan sharks set up shop where they can operate unregulated. As a result, there is a potential for fraud.
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