How to Keep Instant Payday Loans in Check

[May 21, 2009.]

 

One of the major reasons why instant payday loans turn into disaster for so many is that they enter into the agreement without necessary information or a strategy for repayment. Just like any financial agreement, it’s vital to prepare for life after the loan. And here’s how to do it.

Ground Zero: The Payday Loan Reform Act of 2009
Mistakenly thought as anti payday loan legislation, the Payday Loan Reform Act of 2009 is simply a list of protections for consumers that dictate best-practices in the payday loans industry. It includes such directives as the maximum fees that can be set by any lender and caps for borrowing amounts. Knowing these protections shouldn’t keep borrowers from exploring loan options. Rather, they should serve as a benchmark to compare legitimate lenders from predatory ones.

How to Use This Strategy: Browse the full edition of the Payday Loan Reform Act of 2009 and have a copy when visiting potential lenders.

Ask for It by Name: The Small Consumer Loan Option
Many payday lenders are offering what they term as the small consumer loan. According to Minnesota Public Radio, these instant payday loans have been responsible for a 10 to 15 percent increase in Internet-based borrowing. The public response has been primarily positive to these new, stripped-down loan options--primarily because the APRs are significantly lower on smaller lending amounts.

How to Use This Strategy: Find lenders that offer the small consumer loan and use it as an alternative to traditional payday loans.

Have a Plan: Be Ready to Repay
This “how-to” might be obvious, but it still requires mentioning. Consumers that borrow money indiscriminately are asking for trouble. Instant payday loans are not intended to bail out debts. Rather, they’re meant to cover debts until funds arrive that make up the difference. The News Tribune explains that payday loans are much less expensive than bounced checks and bankruptcy proceedings for consumers in the long run.

How to Use This Strategy: Before utilizing payday loans, know exactly how and when repayment will occur--failure to do so invites financial troubles in the future.

 

About Author:

Kelly Richardson is a freelance writer, marcomm consultant and digital entrepreneur. He’s written content for Fortune 500s Google, Yahoo!, Microsoft and Wells Fargo. Find out more about him at kellyrichardsoncopywriting.com.