5 Tips for Saving with Payday Loans
Posted on Saturday, October 30th, 2010 at 12:10 pm in General Payday Loan Tips, Helpful Payday Loan Info
1. Get the best deal. It’s easy to shop around for the best payday loan price, just like you would comparison shop to get the best price on a large purchase. Start by searching for online payday advance lenders who are licensed in your home state. Compare the service fees and annual percentage rates (APR) for each lender and choose the lender with the lowest fees and APR. You can save significantly by taking the time to find the right lender for your financial need.
2. Pay it off right away. Your interest rate will be significantly lower when you pay off your payday advance in full the day it’s due (usually on your next payday, so you’re guaranteed to have enough cash in your account). You’ll pay a service fee with your principal balance, usually between 10 to 20%. If you get several rollovers – which require you to pay the service fee each time you want to renew your loan every two weeks to one month – your APR will increase quickly to somewhere between 300 and 500%, depending on your lender’s fees. Paying your cash advance back in full will save you a lot of money.
3. Don’t get trapped by rollovers. Rollovers are the top payday loan debt trap. A rollover lets you renew your payday advance for another pay cycle by paying the interest due at the end of every term. If you can’t afford to repay your payday loan in full, consider an installment plan instead. Installment plans let you pay a portion of the interest with your principal payment, keeping your APR lower than rollovers would.
4. Only borrow what you can pay back. If you earn $1,000 a month, don’t take out a $1,500 payday loan. Stay within your budget and only borrow the cash amount you need for your emergency or to make ends meet.
5. Use your payday loan with a good household budget. You should have a sound budget in place to keep your finances running smoothly after your payday loan is paid back. Budgeting can help you save significantly when you’re back on your feet with a payday loan!
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