There are several key things that you have to look for in a payday loan contract prior to signing. You don’t want to agree to a loan offer before reading it in full, no matter how generous it seems on the surface. When you take a close look at these things, you will increase your chances of getting an amazing overall deal on your loan. One of the biggest mistakes you could possible make is to breeze through the loan offer before you have gone through even the tiniest details and fine print.
- Interest Rate
The interest rate will definitely be one of the biggest things to look for in your loan contract. Make sure that the rate mentioned in the contract is what you agreed to with the lender from the start. If you think that you could do better, you might want to take some time to shop around. Payday loan rates can be somewhat high, but you should be able to get a reasonable deal with enough research. You probably shouldn’t agree to the first offer you are given unless the rate is truly low.
- Interest After Default
You should also find out what the interest rate will be on your loan if it goes into default. This will essentially be the rate you pay if you fail to pay back the loan by the due date. The default rate is typically much higher than the regular interest rate. You will need to keep this in mind when looking at your contract.
- Early Repayment
The loan contract should also say something about prepayment, which is when you pay back the loan before the due date. Most of these private lenders allow prepayment and don’t charge any penalties, but this isn’t always the case. You have to check to see what the contract says before proceeding. You don’t want to borrow from a lender that charges any prepayment fees or penalties, regardless of how low they are. You should be able to pay back your loan early if you are able to without having to worry about any additional fees.
- Hidden Fees
Make sure that there are no hidden fees whatsoever in your loan contract. This isn’t something that most payday loan lenders do, but you still want to be aware of it. The last thing you want is to deal with paying a lot of extra fees that you weren’t anticipating. Legitimate lenders don’t charge hidden fees. If you see this in the contract you are sent, you should start looking for a different lender immediately. It just isn’t worth all of the hassle and extra expense.
- Payment Amount
If you are borrowing a large sum of money, you might be paying your loan back in instalments. If this is the case, you will need to check the contract to see how much each payment will be. You’ll most likely be required to submit one payment each week or month. These details are very important when you are trying to determine whether or not you can actually afford the loan. This amount should include the APR and any other fees for a total amount.
- Late Fees
Pretty much all lenders charge additional fees if a borrower is late paying back their loan. This is unavoidable, but you still need to know how much they are going to charge. You shouldn’t choose a lender that will charge you an exorbitant late fee, as it should be a somewhat reasonable amount. If the fee is very high, you can always try to negotiate it down. Most of these lenders are pretty flexible, but some are willing to bend farther than others.
- Due Date
The date that the loan is due to be paid back in full will be included in the final contract/agreement document. You need to know when you have to pay it all back by so that you aren’t late. Make sure to ask the lender what their policy is like on giving extensions. If you are in a position where you need more time to pay back your loan, you should be able to get it. Most lenders are fair enough to do this, but it never hurts to double check.
Before you go ahead and sign that payday loan contract, you absolutely need to consider all of these things. It is important because these terms and details will have a direct impact on your ability to pay back the money on time. The more thorough you are in looking over all of these details, the better off you are going to be. You shouldn’t treat getting a payday loan as a casual thing, as it is a serious financial matter.