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Make Ends Meet With A Loan From New Payday Lenders

With consumers still feeling the brunt of a global economic downturn, people are often strapped for cash. However, unless you have good credit, or collateral, you are unlikely to be able to get the loan you may so desperately need in the short-term. One alternative for consumers is the payday loan, a short-term loan without collateral designed for borrowers with poor credit but who are able to vouch for their ability to pay with a post-dated check and recent pay stubs. New payday lenders open up every day, whether online or in your local area, and you may be able to find the quick cash you need.

The loan, also sometimes called a cash or paycheck advance, is not available in all areas due to lending laws. Even an online lender may refuse to do business with you depending on your location. The main reason for this is the relatively high fees that payday lenders charge. Due to the short-term nature of the loan, even small interest rates quickly compound if the lender is used repeatedly. The typical end cost to a consumer is in the area of 25 percent of the loan.

The average duration of a payday loan is around two weeks at maximum, usually arranged to be repaid immediately after the borrower's next paycheck is deposited into their account. Payment is ensured by the aforementioned use of paycheck stubs and a check from the borrower that is dated for the day the loan is to be repaid.

In the absence of traditional collateral, the borrower is encouraged to repay the loan by the check and the high interest rates. In the event that the check bounces, they will be facing both fees from the bank and they will have to pay more interest on the loan itself.

The main disadvantage of the payday loan is the high interest rate. Borrowers may find that after repaying the original loan they need a *new* loan, and the payday lender again takes 25 percent of the money.

Payday loans are therefore generally not suggested as a regular source of credit, but they do serve an important purpose as an emergency cash source for those with nowhere else to turn. Compared to the penalties and overdrafts that would be incurred in a two week period, payday loans are a breath of fresh air.

However, you will want to make sure the particular lender you are choosing is the best option for you, and whether you even need the loan. Pawnbrokers may offer better rates for collateral that a traditional bank would not accept.

If all else fails, you may find that a loan from a new payday lender will allow you to repay your other loan, but only do this if it is strictly necessary. It is important while utilizing credit to not become ensnared in debt. However, with a proper amount of financial planning and making sure you get the best available rate, you will be able to utilize payday loans to your benefit.

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