For many hard working people or when the new year is coming, it is the time that people are putting added expenses and gifts onto credit cards. For various expenses, people have to face the credit problem. At that time, some people may pay attention to loans. Just imagine getting loans approved in no time. Such are payday loans. The idea of obtaining instant payday loans through online lenders is fast gaining popularity primarily because obtaining cash advance loans from any online lender is an easy and convenient process where the borrower is not even required to move an inch from his house.
However, borrowers are ignoring the fact that there are several dangers and risks associated with online payday loans. Yes, here are a few things to look out for. If you can relate to at least one or two of them, then it’s better to forego the idea of payday loans if you don’t want to put yourself in a high-risk situation.
What is a payday loan?
A payday cash advance is really something most all of us is going to need if not today, in the near future. Everyone knows that cash doesn’t grow on trees and it’s need is seemingly never ending with unexpected bills and expenses always awaiting you on the horizon.
Risks And Dangers:
The foremost danger is the interest rate charged by online lenders. In most cases, the annual percentage rates on these loans range between 550-650 percent. For example, a payday loan of $500 can cost an excess of $150, if the loan needs to be repaid on the next payday. This amount will be electronically deducted from the borrower’s checking account. In case the borrower does not have enough funds in the account, he is liable to pay charges that are levied both the bank and the lender.
At the same time, the second danger associated with online payday loans is that online lenders automatically renew the loan even if the borrower’s loan is due on the next payday. Since they have access to the borrower’s bank details, they just withdraw the required finance charges from the account while extending the loan for another pay cycle without even seeking the permission of the borrower. Borrower comes to know about this once he gets his periodical bank statement.
Another risk is the requirement of divulging important and confidential personal information such as bank account number and social security number to the lender while applying for an online payday loan. Revealing any such information on the website can be dangerous. In fact, this strategy has formed the basis of several online payday loan scams aimed towards duping borrowers.
Thus, while approaching online lenders for payday loans next time, you should keep careful and think it twice before deciding to obtain it.…