Teaching Kids to Be Responsible with Money

Loans, Loans, And More Loans: What Kind Interests You?

by Ian Wallace

When you need a loan for something, where do you go? You could go to several banks, all to be turned down for this or that reason, or denied the loan because it is too small of an amount for the banks to bother with it. You could also go to any number of loan centers, where there are all kinds of loans and all kinds of interest rates to help you. Here are just a few of the loans you can get from various non-traditional lending places, and what you can expect to pay in fees or interest.

The Traditional Payday Loan

This was the first type of small amount, emergency funding loan offered to consumers some twenty years ago. You write a post-dated check for your next payday in the loan amount you need plus the fee that the lender charges. The lender holds onto the check until the date on the check, and then deposits the check to recoup all of the money you borrowed, plus the fees. The fee can be anywhere from ten dollars on every hundred you borrow, to an interest rate of fifteen or twenty percent per day until your next payday. If you can roll with that amount, you can borrow what you need until you get paid again. 

The Refinance-able Payday Loan

The terms for this type of payday loan are very similar to the traditional payday loan. The one glaring difference is that you can call the lender up to the close of the preceding business day before the lender deposits your check and let them know that you would like to refinance. To refinance your payday loan, you must make a minimum payment on the loan, typically in the amount of the fees and interest on the loan. The lender then writes a new check to extend the loan out two more weeks. While this may be convenient and helpful for anyone who might have forgotten that they owed some other big bill or that an accounting error robbed them of expected cash from their paycheck, it should only be used when absolutely necessary. The refinancing fees can add up to much more than the loan amount itself was originally. 

The Auto Title Loan

Your car title (and by extent, your car) is used as collateral for this type of loan. The lender evaluates your vehicle visually, and then takes that value into account when offering you a loan. You can take all or part of the amount offered. The interest rate is ten to twenty times that of the highest interest rate on a credit card, but the loan can be repaid over a period of several months and there is often no charge for early repayment. 

Contact a lender, like American Cash Advance and Title Loan, to learn more.