Payday loans come with exorbitant interest rates and very short terms. The way they work is that a lender loans you funds until your next paycheck, at which point a single payment for the principal plus interest and fees is due. While payday loans may seem like a good idea to avoid high late fees or reconnection charges that come from not paying a bill, they are extremely risky.
The interest rates for payday loans are extreme, averaging between 300% and 800%. Lenders justify these rates because the normal term for a payday loan is between two and four weeks and rates represent interest on a full-year loan. The problem many borrowers face is that they are not able to pay off the large loan amount in one lump sum on their next payday. Most services offer renewals or rollovers, which provide more time to pay off the loan but also mean that interest starts adding up and high rates start making a noticeable difference.
While we do not recommend you take out a payday loan, we do recommend you have all the information you can if you decide you want one. We urge you to look into the lender before you agree to anything because many payday loan companies are the subject of lawsuits and investigations for illegal practices, and some have been fined for shady practices or customer harassment.
If we discover illegal lending or questionable practices in a service we review, we remove it from our lineup to ensure you have the best choices. However, it is wise to do your own research and learn everything you can. Houston payday loan services – including our top three of 100DayLoans, NetLoanUSA and 24/7Loan – connect you with third-party lenders to help you find the right payday loan, so look into the lender as well as the company connecting you with it.
Payday Loan Companies: What to Look For
Because of the high interest rates and short terms before payment is due, you want to know the ins and outs of your payday loan. Texas laws regulate certain aspects of payday loans, so you can read our articles on payday loans in Houston to learn about the process in your area. There are no direct lenders in Texas, so any service you decide to use will connect you with a third-party lender to complete your loan. The follow is the criteria we sent out when reviewing and ranking services available for payday loans in Houston.
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