3 Warning Signs of a Payday Lender to Avoid

If you have a financial setback and need cash in a hurry, you might want to turn to a payday lender to get some quick cash before your next paycheck comes in. Before you do that, there are some dangers that come with payday loans that you should know about. Here are three warning signs of a payday lender to avoid:

1. They're Only Online

Only a very low number of online payday lenders are legitimate businesses. If they don't have a local store you can walk into, you are better off avoiding a web-only option.

2. Short Loan Term, High Loan Cost

A common loan option that you'll see with a payday lender is a very short loan term. The loan term is often 14 days. This may sound attractive, because you know when your next paycheck is coming, and you should know that it will cover the cost of the loan. While they will give you a dollar amount for the fee, they might not tell you the APR. The APR is usually higher and works out to 300 to 400 percent. That adds up quickly if you have to extend the term of the loan.

3. Loan for Your Full Paycheck

A loan for full paycheck loan is a loan that should be avoided. If any necessary expense comes up that you haven't planned for, whether it's a car repair or simply a few groceries for the kids, you'll be in a terrible position with the lender. If you have to extend a loan for the amount of your full paycheck, you might find yourself in a financial hole that could take years to climb out of.

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