One-Sided Contracts of Internet Payday Loans.
Internet payday loans are easy to locate using any kind of search engine. Payday lenders have their ads placed in many other sites and they obtain people’s emails to send their advertising pitch to numerous inboxes. Internet payday loans are hyped as the convenient and fast solution to a financial shortage. But this is the exact opposite. Payday loans lead to a worse financial situation. This can be immediately seen if attention is paid to the contracts that internet payday lenders give to their borrowers. Here are typical features of a payday loan contract.
One feature of a payday loan contract is called the arbitration clause. It is a legalistic term but it simply means that if there are disputes between the two parties making the contract, this dispute must be settled outside the court, in a pre-chosen state or nation, and before a pre-chosen group of people who will make a decision. This means that if the borrower wants to challenge the actions of the payday lender, this will be discussed and decided upon in a place that could be hundreds of miles away from the location of the borrower. The laws of the state where the payday company wants to hold the arbitration would be different from the laws of the borrower’s state. Worse, the arbitration could be held in another country. The expenses alone would deter the borrower from pursuing his issues against the payday lender.
Then, the arbitration procedure can be held in front of an organization or a group which could be biased in favor of the payday lender. A dispute is usually best settled in court where the chances of a fair decision are high. But with the arbitration clause, it could be held before people who may have already decided to protect the interests of the payday lender.
Another feature of a payday loan contract is a statement, which refers to the borrower’s agreement to never be involved in a class action suit against the payday lender. Many borrowers often disregard this statement believing that there will be no reason to file charges against the payday loan company. Tragically, there are many possible reasons. For example, some internet payday loans are automatically renewed every two weeks even without communication with the client. This means that the payday lender immediately withdraws the finance charge from the borrower’s bank account. To give a stranger such easy access to a personal checking account should be disturbing enough.
And still another feature of a payday loan contract is the agreement on the part of the borrower to never proclaim bankruptcy. In many respects, claiming bankruptcy is bad news because the borrower’s credit history is smeared and the borrower will have difficulty obtaining loans. But bankruptcy is also a financial move that an honest person can take when he finds himself unable to meet all his financial obligations. In the payday loan contract, bankruptcy does not become an option. This means that the payday lender can still make electronic withdrawals for the finance charges because the borrower’s account is obligated to remain open. With insufficient funds, both the bank and the payday lender can charge penalties.
Clearly, the contracts of internet payday loans are one-sided and always in favor of the lender. The borrower must realize that he faces many financial, security, and legal risks each time he obtains a payday loan and signs that dubious contract.
Strategies to Get Out of Debt
Three Simple Strategies to Get Out of Debt.
Sometimes we do not have to look far to search for answers. The answers we are seeking out might be just in front of us or within us. Your greatest competitor is yourself. If you are having a hard time getting out of debt maybe because it is you that is keeping it tough. Below are simple yet very effective approaches to finally realizing that priceless feeling of being debt free:
Strategy 1: Know thy credit card
Even before you apply for that magical credit card that you have always wanted you should have known the important details. Such information includes maximum credit, interest rate, minimum payments, monthly fees, charges for special services, and other fees. Whether you like it or not these numbers have a significant impact on your billing statement. That is the reason it pays to know. The more you know, the more aware you are with its effects and consequences. When your head is already six feet under because of debts, you can have better alternatives if you are familiar with various debt reduction programs, assuming that your credit card company offers one. Recognizing your credit card’s capacity and limitations is identifying your own with regards to financial capabilities.
Strategy 2: Spend wisely
It is not how much you earn. It is how much you save! Cut down unnecessary expenses. It may seem impossible and unbearable to live without your mobile phone, weekly dinners, cable subscription, latest designer clothes, vacations escapade, etc. Consequently, you will be able pay more than the minimum payment and save additional cash if you learn to control this extra spending. Learn to deal with temptations.
Start saying no when family or friends ask you to swipe that magical card for not so important wishes. Saving also means cash on hand that you can use for unexpected expenses. Regardless of the amount, the money you save now can save you from future and serious problems.
Strategy 3: Look for extra jobs
In very rare cases, it is impossible to cut down some expenses because of its necessity or urgency. It is also sometimes difficult to predict and minimize unexpected expenditures. The next best thing to do is find additional source of income. It could be part-time and contractual jobs or any professional service you could offer. This is the time to take your job and other skills or talents seriously. Additional money means additional capacity to pay more debts and chance to get out of it but this not an assurance. There are people who splurge more knowing they have more money to spend which means added debts and longer time to recover from financial crisis.
The strategies discussed above apply mostly to general cases. There are instances when other options or strategies are better, that will depend on your personal circumstances. The main key point here is your commitment. Your determination to get out of debt will be the major driving force that will motivate and guide you in continuing all your efforts.
How to avoid Payday Loans
Payday loans give the impression that the interest is reasonable but when this interest is converted into annual percentage rates or APR, the interest balloons out considerably. The annual interest of payday loans could be six to eight times the loaned amount. This means that if an amount of $1,500 is borrowed and this loan is not paid for a year, the borrower has a financial obligation to settle a total amount of about $12,000.
The high interest rates of payday loans should be enough to create a knee-jerk reaction when someone gives a name of a payday lender. But there will be times when immediate funds are needed and payday loans beckon like a siren call. There are ways to steer clear of payday loans and here are some suggestions.
When immediate funds are needed, there are other sources of cash or loan that can be tapped into. For an employee, the most obvious source of money is a cash advance from the employer. Most employers are aware that unavoidable circumstances can place an employee in dire need of cash. This is why the concept of cash advance was invented. An employee should look into the employer’s policies regarding cash advances.
Another source of money is a loan from a family member or from a friend. Brothers and sisters may not be the most sympathetic people to approach when one has a financial crisis but they certainly do not charge high interest rates. Social mores also frown upon the idea of borrowing from friends. But friends also do not charge high interest rates.
To make the loan from either family or friend less of a charity and more of a business transaction, create a written agreement about the loan. The agreement need not imitate the legalese of loan contracts. It needs only to indicate the amount loaned and the promised date when the loan will be paid off. In some cases, the written agreement may indicate an extended method of payment in which dates are listed together with the amounts to be paid on those dates.
The other sources of emergency cash can be small loans coming from credit unions or cash advances from credit cards. These loans charge interests but their APR is several times lower than that of payday loans. When considering a cash advance from credit cards, it would be advisable to choose the credit card that imposes the lowest APR on cash advances.
Of course, the best strategy to steer clear of payday loans is to avoid situations in which cash is needed and there is no saved money available. To avoid such situations, there are a number of things that any determined person can do. The first of them is creating a budget in which the expenses should not be higher than the earnings. Spending less is all about living below your means and preventing the self from buying stuff that are not really needed.
Another technique is to set aside savings first before creating a budget. For example, an amount of $50 is placed in savings from every payday. The savings will accumulate and will become the best source of money in times of emergency.
The financial danger of payday loans cannot be overemphasized. A sensible and rational person should consider alternatives to obtaining funds rather than getting a payday loan.
Step to Take to get out of Debt.
You cannot manage something you cannot measure. But it does not necessarily mean you should have all the details to have a good start. The initial things you should be aware of to re-establish your financial existence is to calculate how much you owe, how much you earn and how much you spend on a given time period.
Step 1: Compute the total amount you owe
The end result may shock you but it is better that way before it is too late. Get a pen and paper and start listing all your debts. Include every debt from mortgages, loan payments, insurance, utility bills, to travel expenses. Also, take note how much is the interest rate and minimum monthly payment for each debt. Having all these important information will help you manage your debts and make better decisions.
Step 2: Determine how much you earn
Obviously, you need a source of income to pay up your debts. If you have extra and part-time jobs I guess it is time for you to take it seriously. At least estimate how much is your expected earnings from each job on a monthly basis. Combine it with your monthly salary from a regular job.
Step 3: Determine your monthly expenses
Unfortunately, it is not only debts that you have take care of, at least for now. Your expenses should account for all basic needs such as food, rent, utility expenses, gas, etc. Up to this point, you should already have an approximation of your capability to pay all outstanding debts.
Step 4: Deduct all your basic expenses from income to get net pay
This is the point of no return so brace yourself. Deduct all your expenses from all income and it should give you the remaining amount you can use to pay off your debts. Hopefully it is a positive amount. If it is, then it is a good sign. If not, that is another concern for you to be worried of. It is also possible and recommended to use part of the remaining amount to place in savings. You could use it for future unexpected expenses - one probable reason that caused you incurring debts.
Step 5: Set regular payment for a debt or some debts
If you reach this point you have a reason to celebrate so do not lose the momentum. Check all details of each debt and prioritize which one to pay first. Be sure to make a commitment to pay regularly. It may take years to reduce and wipe all those debts but it is better than adding more to it.
Getting out from the rat race of debt payment does not require sophisticated strategies. As simple as knowing your total debts, income and expenses can help you find and formulate better options. These practical initial steps of course should be accompanied with other useful information such as payment policies of your creditors, and the different credit options you could avail. Most importantly, you should have the right attitude and mind-set to be victorious in getting out of debt.
Payday Loan vs Short Term Loan
The Difference Between a Payday Loan and Short Term Loan
If you need a smaller sized loan fast, you may be torn between the
payday loans that you see advertised frequently and a regular short
term loan. It is important to understand the differences to ensure
that you make the best choice for your situation.
First, it is important to evaluate the usage of each loan. A payday
loan is most likely to be useful in an emergency – you need a small
amount of money fast and cannot wait for approval. As the name
implies, it would be a small amount of money, not more than you make
in an average pay check. On the other hand, a short term loan is
generally for larger expenses that you can still pay off quickly, such
as a home repair job or paying for a wedding.
The basics of short term loans
Short term loans (example : ThinkCash Short Term Loans) are
generally unsecured, meaning that you do not have to provide a form of
collateral to be approved. The repayment varies between lenders and
loan types, but on average, most short term loans have to be repaid
within 5 to 15 years. The actual amount that you can get approved for
also varies, but generally these loans are for under $50,000.
The main disadvantage to short term loans is that they are more
expensive than other types of loans. They tend to have a higher
interest rate to make up for the lack of collateral. The better your
credit rating, the more likely you will obtain a better rate, but you
will still want to shop around from lender to lender for your best
rate. If you have bad credit, you may still qualify for short term
loans, but be advised that you will not be able to take out as much
money or qualify for the best financial terms.
Understanding payday loans
Payday loans (example : PayDayOne) are well advertised in the media, and they may appear to offer many benefits.
While they may seem to be the answer for someone who needs money now, you have to be careful in ascertaining whether loan is worth the cost. What many of these lenders do not bother listing in their advertisements is the cost of the loan, the difficult loan term, and the exorbitant annual percentage rates.
A payday loan requires the borrower to write a postdated check. You
generally will need to provide a pay stub from your job to qualify.
The lender will then give you cash, but it will be for less than the
amount of the check. The difference is the lender's profit. On
average, payday loan lenders will charge $15 to $50 for every $90
borrowed. This money only covers the term of the loan, which is
generally about a month. If you do not pay the money back by that
time, you could be subject to even more finance charges.
The problem comes if you do not have the funds in your checking
account when the time arrives for the lending institution to cash your
postdated check. Some consumers will then fall into a cycle of taking
out a new loan to cover the old one, acquiring new fees each time. If
they cannot pay back the loan quickly, they can quickly end up with a
huge amount of debt and no way to pay it.
Generally, if you have the option, a short-term loan is financially
better than a payday loan. However, if you need the money quickly or
for an emergency, then a payday loan can suit your needs; you will
simply need to ensure that you have sufficient funds in your checking
account to cover your postdated check. The two options meet different
needs and financial circumstances, but when you understand the
fundamentals, you can make a great choice for yourself that will not
impede your long-term credit score.
The small business insurance plans and quotes are offered by the insurance companies for the small entrepreneurs to establish their business on the secured terms. There are many insurance companies which offer free insurance leads to cater the needs of the insurers. The annual travel insurance is very beneficial for the insurers to get the profits by taking advantages of all low charges of traveling expenses. The insurer has a right to have home insurance claim for the compensation of loss in the case of any kind of disaster. It is very necessary to get quotes of the reliable insurance company in order to escape of fraud insurance. There is a dire need of debt consolidation consultant for the debt elimination in the proper way.
Obtaining Payday Loans from the Internet
The Consequences of Obtaining Payday Loans from the Internet
The electronic age has arrived. Many consumers, investors, and entrepreneurs transact their business over the internet. An ordinary depositor can go online and open a webpage that contains information about his checking account. From this webpage, the depositor can make fund transfers, pay bills, and do a host of other financial transactions. The internet is a great tool for people who wanted to save time from waiting in line inside the bank premises. But the internet does not have the reputation of being the safest place. There are many fraudulent activities conducted over the internet. The internet can be a medium for criminal activities.
With this nature of the internet, a potential borrower may want to reconsider an application for a payday loan. He may want to hit the escape button or click “cancel” instead of choosing “ok” or “send application.” This is because there are many risks in obtaining payday loans from internet lenders. The two most documented consequences of acquiring a payday loan online are identity theft and loss of bank security.
Identity theft is a potential threat when obtaining payday loans using the internet. With online payday lenders, the borrower must fill out an online application form that demands personal information such as the social security number. This social security number should be given only to trusted institutions and not to anyone. A stranger can access much information about a person by simply using the social security number.
This means that the online payday lender may not be a real lender but a phishing site. Phishing is obtaining personal financial information by asking the internet surfer to fill out and then send forms. The real banks and credit unions have placed safety measures against phishing. Their web addresses contain the “https” in which the added letter “s” means a secure site. For many internet payday lenders, there are no measures taken to secure their site from hackers.
The loss of bank security is a grave consequence of using online payday loans. These internet payday lenders will always ask for the borrower’s account number and routing number. Their reason sounded legitimate. The account number and routing number will allow the internet payday lenders to deposit the amount being loaned from them into the borrower’s account. But, the disclosure of account numbers will also allow the lenders to withdraw from the borrower’s account. Thus, it is a possibility to end up with zero balance instead of obtaining the loaned amount.
The security measures placed by banks and credit unions become powerless when the borrowers give their consent to payday lenders to automatically renew the terms of the payday loan. This automatic renewal means that the lender can keep withdrawing the finance charge from the borrower’s checking account every payday. Unless the borrower contacts the lender and makes specific arrangements to pay the loaned amount in full, this withdrawal will continue and the debt is never paid. The automatic renewal implies that the borrower will need to take another route of action to pay off the debt.
Of course, the borrower can file a complaint against the payday lenders. But such complaints can be quite difficult for internet payday lenders because they rarely reveal their actual location. Some internet payday lenders even claim that their office is outside the country. Nevertheless, the Federal Trade Commission assures that any complaint filed against lenders must be filed in the state where the borrower lives. The payday loan is also subject to the laws of the borrower’s state.