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How to Avoid Payday Loan Pitfalls

Over 12 million Americans depend on payday loans every year to cater for unexpected expenses and income volatility. The truth is that some lenders still exploit borrowers who need financial help and this even makes most people come off worse after taking out a payday loan

To make matter worse, the lack of adequate regulation of these lenders and few lending options available has seen most people have terrible experiences in the hands of lenders who are scams. Lots of people are already stuck in debt traps of charges worth in excess of 100% APR. this is not a good thing for a person looking for financial succor only to fall into even precarious situations.

Once you are stuck in a debt that is draining you with lots of hidden charges and rollovers, you will start experiencing a downturn in your credit score and you will still struggle to pay your bills at the same time. This can be seriously disheartening.

Because of the unscrupulous lender who manipulate people via payday loans charging rollovers, and high-interest fees, 22 states in the United States have had to ban or limit payday loans. This is in a bit to safeguard unsuspecting borrowers.

We will consider some of the major pitfalls that can put you into trouble when you get a payday loan;

Pitfall 1: Failure to consider cheaper alternatives

One thing you must do when you need to get a payday loan is that you should go for a cheap alternative. Request quotes from more than one lender and makes the right choice.

To avoid taking out a payday loan, you can consider other options that can help you. Some of these options include the following;

  • Start a side hustle to make more money. If you can make more money and limit your debt profile, you will have enough left.
  • Reduce expenses. You should look at your bills and check for the ones you can cut out. Look at some things that you can do without and strike them out.
  • Consider selling items that you don’t need or wouldn’t need any time soon.

Other borrowing options that are cheaper than a payday loan that you can explore include; getting a credit card advance, getting a salary advance from your employer, borrowing from family and friends, and you can also take out a personal loan.

Pitfall 2: Deal with only licensed lenders

Avoid taking out a loan from a lender that is not licensed. These unlicensed lenders are referred to as a loan sharks and you should avoid them at all costs. These lenders do not follow state laws guiding payday loans, and they take advantage of their clients by tricking borrowers into debt traps, charging exorbitant interest rates, and also practicing illegal measures to collect a debt.

Hence, it is important that you deal with only a licensed lender who is authorized, controlled, and regulated by state laws. You can contact your attorney general or state regulator to check and confirm if your lender is licensed.

Pitfall 3: Avoid Payday loan Middlemen

This is another pitfall that you should avoid. Middlemen are brokers or third-party agents that do not learn money directly but search around for lenders on your behalf. This option can be unsafe and even more expensive. These middlemen will have access to your personal information.

Do everything you can to avoid middlemen negotiating on your behalf. Relate directly with your lender as you will be safer with them and you can keep your confidentiality as well.

Pitfall 4: Understand terms such as Annual Percentage Rate (APR)

You need to take your time to understand what an interest rate is and what APR stands for. APR is the term that describes how much the loan will cost in its entirety. The APR puts together all the interest rates you will pay on the loan and all charges that you may incur from your lender. Depending on the life of your loan, a higher APR will result in a higher cost across the life of the loan.

You need to understand the financial terms; interest and principal for you to know what the APR actually means. Interest is the amount you pay your lender in addition to the actual amount you have borrowed, while the principal is the actual amount that you borrowed. APR is the number that shows how expensive the interest rate is compared to the amount you borrowed on a yearly rate.

Pitfall 5; Hidden charges

You need to find out from your lenders what are the charges that you may incur in the course of the loan. You need to find out if they charge a loan-application fee, late payment fee, customer service fee, prepayment fee, prepayment fee, and returned check fee among others.

This will help you to know how much you will incur if you miss a payment and you can be stricter in adhering to payment dates.

This article was brought to you by TFC Title Loans, we try to bring to you the most informative information. If you are interested in getting a title loan local to you, we are able to help you with our large referral network.

We will help you to get the most money by using the equity that you have in your vehicle, the application is fast and we can provide you with same-day funding.

All of our referral partners are in compliance with the CFPB. We will help you to get the money that you need but from a trusted and reliable title lender.

Learn how to obtain a local title loan here.

 

Disclosures

DISCLAIMER: As our policy to make sure you know what we do and what are our limitations, we offer you these disclaimers. We are NOT A LENDER and we do not make short term cash loans or credit decisions. We are a referral service and work only with licensed lenders/brokers.

We may act as the broker for the loan and may not be the direct lender. Loan proceeds are intended primarily for personal, family and household purposes. We do not offer or service student loans.

*Loan amounts by the lenders vary based on your vehicle and your ability to repay the loan.

*Since we do not lend money directly we cannot offer you a solicitation for a loan, except in the state of California. In all other serviced states we WILL match you with a lender based on the information you provide on this website. We will not charge you for this service and our service is not available in all states. States that are serviced by this Web Site may change from time to time and without notice. Personal Unsecured Loans and Auto Title Loans are not available in all states and all areas.

*Auto Title Loan companies typically do not have pre-payment penalties, but we cannot guarantee that every lender meets this standard. Small Business Loans typically do have pre-payment penalties and occasionally will use your car as collateral to secure the loan.

*All lenders are responsible for their own interest rates and payment terms. TFC Title Loans has no control over these rates or payments. Use of the work competitive or reasonable does not mean affordable and borrowers should use their own discretion when working directly with the lender.

*The amount of people who applied for a loan and we helped and those who received a loan is not the same. We cannot guarantee we will find a lender who will fund you.Just because you give us information on this web site, in no way do we guarantee you will be approved for a car title loan or any other type of loan. Not all lenders can provide loan amounts you may see on this web site because loan amounts are limited by state law and/or the lender. Some lenders may require you to use a GPS locator device on your car, active all the time. They may or may not pay for this or charge you for this. This is up to the lender and we have no control over this policy of the lender. Typically larger loans or higher risk loans use a GPS.

*In some circumstances faxing may be required. Use of your cell phone to receive updates is optional.

*Car Title Loans are expensive and you may have other ways to get funding that is less expensive. These types of loans are meant to provide you with short term financing to solve immediate cash needs and should not be considered a long term solution. Residents of some states may not be eligible for a loan. Rejections for loans are not disclosed to our firm and you may want to contact the lender directly.

*Car Title Loan lenders are usually licensed by the State in which you reside. You should consult directly with these regulatory agencies to make sure your lender is licensed and in compliance. These agencies are there to protect you and we advise making sure any lender you receive money from is fully licensed.

*Trading Financial Credit, LLC dba TFC Title Loans, Car Title Loans California, Dineromax. If you are using a screen reader and are having problems using this website, please give us a call at 1-844-242-3543 for immediate assistance.

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