Three Tips about Using Retail Payday Lending
In many places in the country, finding a retail payday lender is as easy as walking a block or two. These storefronts continue to increase in numbers in places where payday lending is allowed. At present, only one state, Georgia, prohibits the loans, but some smaller municipalities have placed their own type of ban on these retailers.
For some consumers, especially those with less than perfect credit, retail payday lending sites feel like the only option. While the loans are very expensive, if you use them wisely, they are an option for short term, unexpected financial needs.
Here are three tips to help you use payday loans as they were intended and to choose the best retail payday lending location.
Choosing a Retail Payday Lender
While most retail payday lenders function similarly, they are not all the same. Of course, you should check their fees and interest rates, but there are other things to consider as well. While you might not think that customer service is important when choosing a retail payday lender, you do need to be confident that the lenders will keep their word and are on top of things enough to not make mistakes that could cost you time and money.
For example, one lender cashed the check left by the borrower one week before the loan was due. This caused several checks to bounce. The lender paid back all of the overdraft and bounced check fees eventually, but it was still a huge hassle getting it all straightened out.
Also, if you choose a fly-by-night or independent retail payday lender, it is tough to know how they will act should you, for any reason, be unable to pay the loan back on time. Will they call you at work every day? Will they call your boss?
The best thing to do is select a retail lender that is part of a national chain. While this is no guarantee that you will be treated well, there is most likely to be strict policies that the store will be required to follow.
Payback
One of the best tips about retail payday lending is to pay the loan back early if at all possible. The amount of money that you could save by doing this is significant. For example, if you borrow $500 for 14 days, you may have to pay back $575. If you pay the loan back in one week, however, you may only have to pay back $537.50. Every day early you can pay back the loan, or even part of the loan, will mean more money in your pocket.
Keep in mind that only the interest for loans will be prorated. If any fees are included, such as processing or application fees, those are not likely to be reduced by paying the loan back early.
Rolling Over Loans
Here is a tip about rolling over loans: Don’t do it. This is a trap that many who use payday lending services fall into. This is an example of what happens:
They borrow $250. On payday, they must pay back $287.50. They pay that amount and then turn around and borrow the $250 again. This means they the borrower is going to continue to pay these fees each month.
It is important to remember that retail payday lending is NOT intended to be a long term solution. When you continue to rollover the loans it can quickly turn into a cycle that is difficult to break. Instead, payback the loan in full and do not borrow again unless it is absolutely necessary.
Some states have enacted laws that require a certain waiting period of between one and seven day before they can take another loan after paying one off. If your state has no such law, pretend it does!
Some consumer groups feel that retail payday lending should be banned completely. Others think that each consumer has the right to make decisions for themselves about such financial matters.
No matter which side you are on, it is important that those who choose to use retail payday lenders do so in a way that it will not further their financial distress.
Choose your lender carefully and use the loans sparingly and only when other options have been exhausted. Pay them back as soon as possible and do not borrow again right away. Those are a few tips to help you use payday loans without hurting your financial situation.
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