Payday loans Houston residents might be curious about are short-term, unsecured loans that require a general credit check and minimum income verification approval process that is brief compared to other forms of loans. Traditional bank loans are typically loans that require a LOT of documentation and verification of what you intend to spend the loan funds on. If you’re interested in payday loans, here’s a brief checklist of the things that will help you get the most out of their usefulness.
They’re short-term loans
The interest rates are higher on payday loans because you will be repaying the loan very quickly. Most people pay a payday loan in 2-4 weeks after they take out the loan. This means that the interest rates will be super high, BUT they won’t amount to an overwhelming amount of money because you’re going to pay them off in only an interest payment or two. Don’t let these loans linger! Pay them off when you say you will.
They’re best reserved for emergencies
Because the interest rates on payday loans are high and can take a substantial portion of your paycheck to pay off, make sure that you take them out only when you absolutely need them. A good example would be a car repair that you MUST pay or else you won’t have a car to get to work. This is a true emergency and it makes it worth it to take out a payday loan if you can’t secure funds from anywhere else.
You don’t put up collateral
Unlike some other forms of loans, you don’t use any physical property as collateral. You simply use your credit rating and income as proof that you will repay the loan. Signing on the dotted line means you’re obligated to repay the loan. No property is involved to secure this loan (it’s unsecured).
If you know these few things about a payday loan, you’ll get the most out of your loan and repay it quickly. Just remember the golden rule of payday loans: Pay them off as soon as possible! They are literally an advance on your next paycheck or two. If you keep your end of the bargain, you won’t pay an outrageous amount of interest or suffer from call after call asking where the loan money is. These loans can be very productive if you use them right.