Unexpected expenses can create a financial crunch. Payday loans may seem like the answer. But, they are not free and they often have variable interest rates. Luckily, community banks and credit unions can provide payday loans at no cost. This means no credit check, no application fee, and no service fees.
Variable interest rates on payday loans
Variable interest rates on payday loans for first-time borrowers aren’t for everyone. They can be more expensive than fixed-rate loans, but the flexibility they offer is worth the risk. Fixed-rate loans may not provide you with the savings you need or may jump in price without warning. Variable-rate loans also offer more flexibility for lenders. Typically, fixed-rate loans start out with a higher interest rate than variable-rate loans.
The interest rate on payday loans is based on an annual percentage rate, which consists of the interest rate, the required costs, and fees. It can vary from one lender to another, and the information on NerdWallet may not reflect the information on actual websites. Also, a pre-qualified offer is not binding, and the lender may try to add fees that you don’t expect.
Community banks and credit unions offer payday loans at no cost
Whether you’re a first-time borrower or are in need of a larger loan, community banks and credit unions may be able to provide a small loan with more flexible repayment terms. These institutions are dedicated to helping their members become more financially stable. They also provide credit counseling and help borrowers set up debt management plans.
Before applying for a payday loan, check your credit report to ensure you’re getting the best deal possible. Make sure the lender you’re dealing with is a legitimate, state-licensed lender. Be wary of lenders making too-good-to-be-true promises. For example, some may tell you that their loan is a great deal, even if you have a poor credit score. Such promises often come with too-good-to-be-tru-to-be-true terms, which can lead to more problems and hurt your credit score.
High service fees
Before applying for a payday loan, make sure you read the loan proposal carefully. While you may be tempted to sign the loan agreement without reading it, there are some things to look for and avoid before signing. For one thing, the loan agreement should be free of hidden fees. Secondly, if you have bad credit, you should avoid applying for a loan with a lender who will charge you an additional fee. High service fees are common among payday loan providers. You should also check the lender’s APRs. If they are high, you are probably applying for a scam.
The highest interest rate for a payday loan is about 391%, but it can go as high as 600%. When applying for a payday loan, it is best to get several loan offers and compare them carefully. Make sure to take your time in weighing the pros and cons of each loan proposal.