Long Term Payday Loans: How Do They Work?
Long term payday loans are basically regular payday loans, with a maturity of fourteen or thirty days (usually at the next pay check), which can be carried over to a new period for as long as the borrower wishes, provided several conditions are met. Let us see how such a loan works.
1. Learn about the credit you are about to contract
Before contracting a long term payday loan, make sure you have read all the lender’s terms and conditions and have familiarized yourself with all costs involved. It is your right, as a customer, to be informed on all charges, so make sure you know everything before signing the contract.
Long term payday loans tend to cost a lot and should be contracted wisely. While regular, two week ones can cost $15 to $20 for every $100 borrowed, carrying over to extended amounts of time can boost expenses to as much as $50 per $100. Hence, you should not rely on long term payday loans as a source of extra cash, but rather as a way to cover unforeseen expenses.
2. Apply for a regular payday loan
You can either apply online or at a local brick and mortar payday loan store. Keep in mind that you can usually find the best deals on the Internet, since an online operator usually has lower expenses (like related to office rent, utilities and sales personnel) and can offer better rates.
3. Pay as much as you can
Pay as much as your budget allows you to by the maturity date (14 or 30 days later, as per the agreement). Make sure you meet the minimum requirements written in the contract (usually pay at least half of the borrowed amount).
4. Extend your loan
At the maturity date, provided you have had no previous payment incidents, the lender can allow you to contract a new loan to pay off the original one. Alternatively, you can extend the deadline for a modest fee – either a flat rate or a percentage of the amount unpaid.
5. Pay your loan down and off
Pay as much as possible so that the amount due, together with the new interest rates, goes down with each maturity date. Failing to do so will cost you more and more each month and, at the end, you will end up paying more interests and fees than the amount you have borrowed.
You will need to make sure you have paid the minimum amounts at the maturity dates so that you can contract a new loan. Otherwise, you could find that the lender refuses to extend the deadline and force you to pay the amount left in full. Refusing or not being able to pay off will lead to more severe consequences, like bad ratings in your credit history, be taken to court and paying large collection fees.
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