Payday Loan Protection

The abuses rife within the payday loan industry have been well documented.  Although the best advice is to steer clear of these lenders, many of us sometimes find ourselves in a position where there is no other alternative.  Larger financial institutions have exited the micro-lending space, and those with less than stellar credit are often left with few choices when it comes to short-term loans.  There is no sugarcoating it — you will pay an obscenely high annualized effective interest rate when dealing with any payday lender.  However, if the correct steps are taken, you can reduce the amount of flesh taken by the lender from a pound to only a few ounces.

After exhausting all other potential avenues for help, payday lenders can be loan sources of last resort.  When seeking a payday loan, your first step is to visit the website of your local Better Business Bureau.  You should hold no illusions that these companies will all receive raving reviews and high ratings — seeing they are in the business of extracting huge interest rates one would expect many customers to be less than enthused with the lender.  Most importantly, you should determine that the payday lender is a legal company following the laws of your State — in order to ensure that you do not end up doing business with the more nefarious and shady characters out there.

The next step is to scrutinize all of the applicable loan terms.  Granted, this can be a daunting task parsing through all of the small text, but your best defense is to cull out the “gotchas” before they eventually arise to bite you in your bank account.  Once you have compared each payday lender calculating the full cost of borrowing, then you are in a position to make the most intelligent choice among your available options.  Make sure you add in all interest, fees and all other charges when making your calculations of how much the loan will eventually cost you in totality.

The most important facet comes after you receive the loan — you should endeavor to pay it back as quickly as humanly possible.  Many consumers get caught in the painful trap of rolling one payday loan over to cover the last.  This will ensure that you work for the rest of your life just covering the massive interest and fee obligations which will be accrued should you take this route.

The last step is to proactively take measures in the future to ensure you do not land again in the position needing a payday loan.  Used on rare occasions with common sense due diligence, payday loans can be a lifesaver.  Done wrong, they can be more expensive than an ex-wife.

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