There are many payday loan providers out there. But it is crucial to find the right provider for seniors. The California Department of Business Oversight reports that seniors accounted for nearly a quarter of all payday loan applicants last year. They took out $2.7 million in loans too. For many, seniors included, payday loans have become essential to making ends meet. This is particularly true in states like California where the cost of living is higher.
But taking out payday loans is a difficult proposition for seniors because so many are on fixed incomes. This article discusses what to look for in payday loan providers to help make seniors make a prudent financial decision.
Know Before You Borrow
Payday loans typically have very high interest attached to them from about $8-$45 for loans $50-$300. So only taking out the amount that is needed is one smart consideration.
Another one is the loan term. The most significant problem with payday loans besides their interest is their 14 day repayment period. Seniors often only get paid once per month making this payment period a serious problem.
Set aside the money to pay it back. This includes cash too. Money that is spent in cash can be added to repay the loan faster.
Seniors who have relatively good credit can also consider credit lines. These payments are often made once a month and have lower interest rates.
Longer Terms are Better
While payday loan terms are typically 14 days. There are payday loan lenders who have 30 day terms or even longer. Lendup is one such lender with a payday loan repayment of 30 days. Their payday day loan amounts may vary by state. But they typically offer between $100 and $250 for anywhere from 7 to 30 days.
* Seniors who choose Lendup have the option of paying a loan back with a bank account or debit card.
* Paying by debit card allows a senior to take a loan out quicker if they need it.
* Plus Lendup rewards things like on-time payments and continued use of the service.
* Customers are also rewarded for taking credit education modules online.
The reward system is called the Lendup ladder. After taking out several payday loans and earning points on the ladder, customers are then given access to installment loans.
These loans start out in small amounts of $100-$250. They increase over time with on-time payments. The installment loan can be set for between 1 and 12 payments depending on the amount. Each payment is made one time per month making it a great options for seniors on a fixed income.
Emergency Credit Lines
Another product to consider that is similar to a payday loan is an emergency credit line. Like a payday loan, payments are every two weeks. But instead of $250, it offers a flexible credit line of up to $2,500. A $300 draw on the credit line might cost 6 payments of $60 every two weeks. This is equal to $120 each month. It's expensive but significantly cheaper than multiple payday loans.
Mobiloans also offers a rewards program that discounts fees with continued use. Seniors should exercise caution when applying to the service. Prior to seeking a loan, use the loan calculators available to see how much 2 total payments will cost each month.
Payday loans and emergency credit lines are good alternatives to have when faced with an unexpected expense. But they should only be used as a last resort if credit cards or a personal loan are not options. Seniors should do their research prior to taking out the loan, know what the fees are and have a plan for paying it back.