Most of us commonly find ourselves in a situation when it’s getting pretty tough to live within our means and cover the expenses between paydays. It may be because of any reason like an emergency car repair, an injury not covered by health insurance or a celebration event in the family. It happens to more people than you think and you are not living in an isolated world. Many people run out of money before the month ends and sometimes payday loans are the right solution in such cases.

If you are applying for a payday loan, make sure that you follow these 10 tips so that you don’t end up making a wrong financial decision or get scammed.

1. You should be at least 18 years old and must have a full time job. This will ensure that you have means to back the loan in your next payday.
2. You should have a steady income whether it is on weekly, bi-weekly or monthly basis.
3. You must have a checking or savings account. This will ensure that you receive and send money electronically.
4. When you are applying for the payday loan, you will need this information to prove to the lender that you are a trustworthy risk to their finance and have the ability to pay back your loan.
5. Be sure to check the loan company being legit. Don’t borrow money from a company that is not licensed in your state. There are large number of companies who do an illegal business and charge excessive interest rates and fees. Check the company with the BBB and the state attorney general’s office with no outstanding or unresolved complaints.
6. Clearly understand the terms of the loan for which you are filling up the application form and paying the fee.
7. Almost all payday loan companies have their website. You should go to their website and find out the fees involved and the interest rates being charged. They should be regulated under the laws of your state.
8. Make sure that you are aware of the penalties involved if you do not pay back the loan on time.
9. Read and understand the terms mentioned in the loan contract copy
10. If you don’t see the required information on the lenders website, it’s not a good idea to get a loan from that company. They are not disclosing the information which sounds to be fishy.

There is a mix of both legit and scam payday loan companies on the internet. You need to protect yourself by dealing with the right company. As you consider the above tips, make sure that you are aware of repaying back the loan and still cover next week’s bills.

• Know how the loan scams work?

A scammer will send you an email or a letter, or chances are that you might see an advertisement on the TV, radio, newspaper, magazine or online and you respond to it. These types of ads will often use the names of large, reputable and well recognized lenders to keep them on the cleaner side. They will ask you to call a third party consultant who collects all the information from you including your social security number. During this telephonic conversation, they will always sound like you have been approved for the loan.

This consultant will now fax over some documents to the applicants. This is often called the welcome packet and directs the applicant to their website for entering further information. You will be asked to enter your bank information on their website.

Now, the applicants will be asked to wire some money as advance payment or a deposit through western union or send the payment through money gram to the consultant. Be always informed that a legitimate lender will never ask for upfront money. Anyone who asks you to put money upfront is not legit and it should ring a bell on you. Those who are victimized will never receive the loan money and the scammer disappears with the application fees and the down payments made by the applicants. You end up being scammed.

These are mostly a type of advance fee frauds preying on unwary consumers, taking their hard earned money for the promise of a loan or credit and leaving them in the hot water. These type of scammers will often try to impersonate some legitimate lenders to attract the consumers and falling for their bogus offer.

They will try to collect all personal information from you and this can often lead to your identity theft. The scammers get the chance to open new credit accounts in your name and running up a high bill which you will be forced to pay when the bill comes at your doorstep.

They will try to get a check from you so that they can use it to make counterfeit checks and use it in other scams.

And above all, theses scammers want your money. They will never leave that chance to make any kind of money that you can send to them.

The scammers are always on the hunt for people with bad credit. They know it very well that these types of people can be their first prey. They need money because of their hard times and they offer big hopes of getting approved for the loan.

Know more about loan scams by reading this article:

http://www.ftc.gov/bcp/conline/pubs/tmarkg/loans.shtm

Home owners can get the loans at the cheapest interest rates against their residential property. These loan plans can often generate more loan amount at lower interest rates.

You can get such a type of loan if you are willing to pledge your property as security to the bank. This will assure them that in case if you fail to repay the loan in time, they can take away your home to recover the cost of the loan. Hence before deciding, it is important that you ensure that you will be able to afford the loan and comfortably make the repayment.

You will find lenders who will sanction the full amount of equity present in your residential property as the loan amount. If you opt for a secured loan for a longer period, the installments will be much smaller and affordable, but the only disadvantage is the quantum of interest will become larger. Your number of repayments will be more in number in comparison to what you have had if the loan is for a shorter time period. You have to make a choice according to your needs and requirements, and choose the right kind of lender that caters to your requisites. You can use these kinds of loans for various purposes like home improvement, wedding, holiday or even for debt consolidation. They are largely preferred over unsecured loans because of the lower interest rates.

Interest rates vary with different kinds of secured loans. If the rate of interest of the loan plan is fixed, you will have steady monthly payments and you will be benefited when there is an unexpected rise in the interest rate in future. On the other hand, if the interest rate is variable and keeps on changing according to the market trend, you will benefit when the rates have gone down by having lower repayments. You can also opt to refinance the loan if you have taken the loan at a fixed rate and the market is going downward.

Another advantage of the secured loans is that you can tackle a bad credit situation. A borrower with a bad credit history has to make a little more extra efforts, by doing some more documentation for getting the loan. Such people have to pay higher interest rates on the secured loan than someone whose scores are good. Chose your loan plan from the variety of options available online. Take free online quotes and decide the best deal in your situation. Know other details like the rates of interests – fixed or variable, repayment period, down payment etc. there are many lenders who are ready to offer these kinds of loans to the freshly employed or self employed people. However the common practice is to offer loans to those people who have been in receipt of regular income for the last two years.

The annual percentage rate (APR) is an interest rate commonly used to compare the loan programs offered by different lenders. As per the laws in Federal Truth in Lending Act, every mortgage company is required to disclose the APR when they advertise their rates.

Example:

30-year fixed

8%

1 point

8.107% APR

This APR will not have any affect on your monthly payments. Your monthly payments are set on the basis of the interest rates and the length of the loan.

APR is designed to measure the true cost of the loan. Sometimes, lenders don’t show the actual rate of the loan and they tend to charge any hidden fees after the loan is granted to the consumer. APR helps to understand the actual cost of the loan and stop lenders from advertising a low rate or any hiding fees in the beginning.

Every lender calculates APR in their own way. So a loan with a lower APR may not be the best deal that you have got from the market. The best way to compare loans will be to ask lenders to provide you a good faith estimate of the actual costs on the same type of program at the same interest rate. then you can subtract all fees that are independent of the loan such as homeowners insurance, title fees, escrow fees, attorney fees, etc. The lender that has the lower loan fees is cheaper than the lender who charges high fees.

In most of the cases, it’s pretty hard to compute APR because the fees are actually not well defined. Go through the fees mentioned below.

These are generally included in the APR:

• Points - both discount points and origination points
• Pre-paid interest. The interest paid from the date the loan closes to the end of the month. Most mortgage companies assume 15 days of interest in their calculations. However, companies may use any number between 1 and 30!
• Loan-processing fee
• Underwriting fee
• Document-preparation fee
• Private mortgage-insurance

The following fees are SOMETIMES included in the APR:

• Loan-application fee
• Credit life insurance (insurance that pays off the mortgage in the event of a borrowers death)

The following fees are normally NOT included in the APR:

• Title or abstract fee
• Escrow fee
• Attorney fee
• Notary fee
• Document preparation (charged by the closing agent)
• Home-inspection fees
• Recording fee
• Transfer taxes
• Credit report
• Appraisal fee

An APR will not tell you the duration for which the rate is locked. A lender offering 10 day rate lock might have a lower APR than another lender who offers a 60 day rate lock.

Never compare a 30 year loan with a 15 year loan using their respective APR. A 15 year loan may have a lower interest rate but the APR might be set high because the loan fees are amortized over a shorter period of time.

Sometimes, even the lenders are not certain about the APR they are charging on the loans. There may be different results on calculating APR because of using different software programs to compute the APR.

APR is a very complex calculation and not clearly defined. Always get a good faith estimate from the lenders and compare the costs. And make sure that you exclude those costs that are independent of the loan.

Before you decide to close your bank account because of continuous debits from the payday loan companies, speak with your bank manager and know the policies regarding ACH transactions after the account is closed. Some banks do have the policy regarding ACH transaction that allows them to force open a closed account and allow the debit from any payday loan company if it’s done within a certain time frame after the account is closed. If your bank has such policy and can force open your closed account, you might end up owing a legal $1,000 bank charge and being reported to the chexsystem. You might have averted the whole mess by owing barely legal (or not at all legal) payday loan companies. The best thing to do is to go and meet with the branch manager in person and know about the ACH transactions after an account is closed.

Just in case, if you are dealing with a bank that has such policies, explain your situation to them. Don’t feel embarrassed. Show the letters sent to the payday loan companies revoking their rights to debit money out of your account. The best option will be to put your account on deposit only, an ach block, or on a hard hold before the account is actually closed in the final stage. Your bank can do one of these things. Don’t take their “no” as an answer. The good thing will be that any payday loan company trying to debit money out of your account won’t get through.

Closing an account is the best solution when you are dealing with so many illegal payday loan sharks on the internet. Leaving the account open gives them the chance to withdraw funds from your account. They go with different names, so blocking them won’t help because they will try to debit using a different amount. They might produce paper checks and run them through your account.

According to some state laws, a borrower can be prosecuted if you have defaulted on your payments and have closed the bank account. But that happens only if it can be proven that you have actually been committing some fraudulent activities. The best thing will be to check with your state attorney general’s office and the state banking commissioner’s office and know about the laws. You want to make sure that you are doing the right thing instead of creating more problems.