If you are in need of payday loans, you will likely try to find a lender that provides quick loans for cheap. The question is, does a cheap payday advance exist? This question is asked by many people in need of instant loans.
An inexpensive payday advance would be defined as one that came with a fairly low interest rate and fees. Unfortunately, for borrowers, finding a payday advance with interest rates as low as those for a traditional loan is impossible.
Many payday lenders charge a significant amount as interest rate and fees. When shopping for a cheap payday advance, you might want to consider what cheap really is.
Why do payday lenders charge higher fees?
There are a number of reasons why instant cash loans come at a higher cost than traditional loans:
- No credit check – Payday lenders do not require a credit check in order to grant payday loans. This makes them quite different than traditional lenders, who have a number or requirements for borrowers who wish to qualify for a loan, like having a good credit score and history, being gainfully employed, showing proof of income with a low debt to income ratio, and, in some cases, having some form of collateral. If you do not meet these requirements, you will not be approved for a traditional loan. Payday lenders take the risk of lending without a credit check, which makes their loans accessible to anyone with proof of income and identification.
- Quick and convenient – Payday loans online are generally quick and convenient. Most payday loans can be provided to a borrower within an hour’s time. They also have longer hours than most banks, which makes payday lenders more convenient for someone who works later than five or six o’clock. Some online payday lenders even offer twenty-four hour service. This is perfect for someone who works on an odd schedule.
- Small loans – In order to make a profit from providing small short-term loans to their borrowers, payday lenders must charge high interest rates and fees. If payday loans were distributed at the same rate as traditional loans, payday lenders would not make a profit and could even lose money in the process.
Can you find inexpensive payday loans?
Now that you understand why payday advances have higher interest rates, there is still the task of finding a cheap one. These days, there are a large number of options when it comes to locating lenders. There are both brick and mortar locations and online lenders to service your needs. As with anything, it is wise to shop around before you sign on the dotted line. Where there are a large number of options, there is generally a cheaper choice. Shopping around can help you find the cheapest possible lender.
Payday loans generally come with rates and fees that fall between $15 and $25 dollars for every $100 dollars borrowed. While this might seem extremely high when you look at the cost of interest spread out over a year’s time, it is important to remember that payday advances are designed to be a short-term solution.
Paying $15-20 dollars to borrow one hundred is cheaper than most overdraft fees. The fee for the loan can also be cheaper than paying the late fee on a credit card or to your leasing company. When you take these things into consideration, the cost of the loan is not really that high.
Payday loans definitely come at a higher rate than traditional loans, but, when you weigh your options, their price might be cheaper than the consequences of leaving other debts, your car repairs or your medical bills unpaid.