How Payday loans Works
Before we get into how to be responsible with payday lending, let’s make sure we’re working with the same definition of a payday loan.
As the name implies, payday loans are usually short-term personal loans that will help you to handle sudden expenses that you can’t cover now but will be able to pay for in the near future.
In short, they’re a bit like getting an advance on a paycheck you know you have coming. However, instead of coming from your employer, these loans come from online loans lenders.
Since most employed people live paycheck-to-paycheck, these loans can be a good way to tide people over until their employer sends them a check. Some banks may provide short-term lending options that are similar to payday loans. But usually, you’ll work with payday lending companies.
Payday loans no credit check are known for having a quick, simple application process and a high approval rate. Because of this, it’s shockingly easy to become dependent on them.
However, it’s important to remember that payday loans come with one huge caveat – a high-interest rate. Even though in most cases, payday loans don’t come in amounts over R8000, a high-interest payment can quickly make you feel like you’re drowning.
Additionally, because you are repaying the loan in a single payment (usually around your payday as the name implies), you’ll need to repay the full amount you borrowed plus all of the fees and interest. This is very different from an installment loan, where you may be repaying over the course of months or years.
You may also be responsible for paying other fees associated with the payday loan. It’s important to take your time when comparing lenders, and ensure that you understand the fee and interest structure they offer.
That said, there are plenty of ways to use payday lending responsibly..