How do I Choose the Best Paycheck Loan?

Tricia Christensen
Tricia Christensen

The paycheck loan typically comes from financial lending services that offer short-term loans to people with low credit ratings, on the basis of the type of money they’re paid. These loans have sizable fees and interest which are then repaid upon receipt of the next paycheck, or they can be extended for longer periods of time, which in turn create much larger repayment fees. Interest rates for these loans are exceptionally high, and financial experts recommend that people not avail themselves of these services, if there is any other safe and legal means of getting the money they need. The chief concern is as repaying a loan diminishes each paycheck, people are tempted to take out more loans or forestall paying them, which can result in a vicious cycle of debt.

People getting a paycheck loan.
People getting a paycheck loan.

Many years ago, the paycheck loan could have been defined in different ways. One way some people sought money they needed for immediate relief was getting an advance on a paycheck from an employer. Employers usually don’t charge for this service.

If this option is available from an employer, it is one of the best ways to choose a paycheck loan. Since there are no fees and no credit checks, it might cover the circumstance that has arisen. Quite a few employers are still willing to accommodate any employee who makes a request under difficult circumstances, though most are not willing to give advances on a regular basis.

Another possibility, in lieu of using financial lenders that give a paycheck loan, is to obtain a loan from a friend or family member, conditioned upon a very short repayment. To do this best, the money must be repaid out of the next paycheck. This method can work well with a willing friend or family member and a person who respectfully repays the money quickly.

If the only option is the paycheck loan from a financial agency, people can do a little bit of comparison shopping to determine best loan. It’s not uncommon to have pay 30% over the loan upon repayment and higher if the loan is rolled over into a new installment loan. Companies tend to set their rates fairly close to each other, but small differences could include fees for certain services, or how the money is disbursed such as by check or direct deposit. Another thing that can be compared is the status of the lender. Looking for businesses with strong community standing and that are members of organizations like the Better Business Bureau may assure better or fairer treatment.

There might be alternate choices available for some people. Credit card companies might offer an instant increase on limits upon request. Sometimes banks can give a quick loan. Things could be pawned or sold outright to raise money. What works in the favor of paycheck loan lenders is that people’s needs are usually urgent and they don’t have time to organize raising funds in a different way.

Tricia Christensen
Tricia Christensen

Tricia has a Literature degree from Sonoma State University and has been a frequent wiseGEEK contributor for many years. She is especially passionate about reading and writing, although her other interests include medicine, art, film, history, politics, ethics, and religion. Tricia lives in Northern California and is currently working on her first novel.

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