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Things To Consider Before Taking Out A Payday Loan

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What are payday loans and how do they work?

If you need fast money, you may be tempted by a short-term loan that you can pay soon. However, whether offered by an online payday loan lender or a check-cashing store in your neighborhood, these loans come with high costs from which it can be difficult to recover.

A payday loan is an advance on your salary that you must repay with your next payday. This is an expensive way to borrow money over a short period of time. These loans can have very high-interest rates.

Characteristics of a payday loan

Payday loans usually do not consist of high amounts, but about $ 500. They usually have higher charges and interest rates than other types of loans. For example, a typical two-week payday loan, with a $ 15 fee for $ 100, would have an annual percentage rate (APR) of almost 400%. Borrowers generally promise to pay off the loan with their next salary. In some cases, the loan is structured through payments over a longer period.

You can receive the loan funds in the form of cash or a check, be charged to a prepaid debit card or electronically deposited into your checking account. To pay off the loan, you usually have to give the lender an authorization to access your account or sign a post-dated check.

Summary of Payday Loans

  • You can only borrow a total of $ 700 or 30% of your gross monthly income, whichever is less.
  • Your information will be recorded in a database throughout the state, ensuring that all payday lenders have their loan information up to date.
  • You can only take 8 loans per 12 month period.
  • If you cannot pay the loan before your loan is due, you can request a payment plan without additional charges.
  • If you currently have a payment plan, you cannot receive another loan.
  • Lenders cannot bother or intimidate when collecting a loan. If you are being harassed, contact the DFI and file a complaint.

What documentation do you need to present to the lender to obtain a loan?

In general, a payday lender requires proof of salary (eg, government employment or benefits), bank account and address. The lender may also ask you for a post-dated check for the full amount of the loan (including loan and interest) or a form authorizing you to withdraw the full amount from your bank account by the due date established in the policy.

What should your payday loan contract include?

The loan agreement should include the following conditions:

  • The loan amount,
  • The number of days of the loan,
  • The total cost of borrowing,
  • The maximum cost per loan tranche of $ 100,
  • The total amount that will have to be repaid,
  • The date on which the loan will have to be repaid,
  • The name and address of the lender,
  • The signature of the borrower.
  • Some lenders require that the loan agreement be signed in person and not over the Internet or over the phone.

Know Your Rights

  1. Any payday loan obtained from a lender without a license with the DFI, and not paid to the lender, cannot be collected by the lender and the lender cannot initiate legal action in the state of Washington to collect the debt. Look RCW 31.45.105.
  2. You have the right to change your mind about the loan within one day.
  3. You have the right to know all the costs involved. You also have the right to a payment plan.
  4. A payday lender cannot threaten criminal prosecution as a method of collecting an overdue loan.
  5. A payday lender cannot allow a borrower to use a new payday loan to pay off an existing payday loan by the same lender or a subsidiary of the lender.
  6. Under the Truth in the Loans, the cost of credit must be disclosed. Among other data, you should receive information showing the financial charges and the annual percentage rate (APR). The APR informs you of the cost of your loan. For example, a 14-day loan for $ 500, with the maximum rate allowed by law would have an APR of 391.07%.

Checklist – Before Taking a Payday Loan

Although a payday loan can be a convenient short-term solution, it is not a solution for long-term money needs.

  • Verify the Lender’s License

Contact the Washington State Department of Financial Institutions to verify that you are working with a licensed lender. 

  • Consider Alternative Solutions

Ask about delaying or making payment arrangements on your accounts that do not generate interest, such as telephone and utility bills. Talk to a friend or family member to borrow money. Ask your employer for the prepayment of your paycheck.

Compare interest rates and lower penalties. For example, some credit unions offer payday loans with lower fees.

  • Just Ask For What You Can Allow To Pay

Just ask for what you can pay with your next paycheck.

  • Avoid Loans From More Than One Lender

Avoid loans from more than one lender at a time.

  • Know If Your Payment Is Due

Know what day your payment is and be sure to pay the loan on time and in full.

  • Take advantage of the Organizations that are Available to Help You With Your Financial Situation

Local organizations in Washington are available to help you with your financial situation. Many of these organizations offer help with budget, credit repair, debt repayment, and much more. Contact your consumer credit counseling service for more information.

Plan the future by making a budget to avoid the need to borrow money for emergencies and unforeseen expenses.

Your payday loan expires and you are unable to repay it. What are the consequences?

You may have to pay a penalty ranging from $ 15 to $ 40, depending on the province where you made the loan.

The penalty is in addition to the amount you owe the lender and interest accrues until you repay the loan in full. 

Personal Money Network provides other useful information and also offers a payday loan with minimum risks! 



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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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