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Finding the Online Payday Advance Lender of Choice

May 18, 2008
Payday loans are becoming more popular, and more in demand, as the global credit crunch continues. But can the average consumer afford to use one of these short-term loans? That is a question that many people are asking right now. And rightly so, because unless they go about finding the best lender, who is interested in helping consumers, a borrower can end up paying more than they should.

If you have decided that applying for a cash advance is your best option, how should you go about it online? First, don't borrow from the first online lender you pull up in Google, Yahoo, or your other favorite search engine. Not all payday loans are the same, and you can usually find a deal that best suits your needs. Look for lenders who are licensed in your state and limit the number of extensions or rollovers on the offer. Avoid using websites that are slim on information. These sites are generally nothing more than "landing pages" for companies that sell applications to true Internet lenders. A true online lender will have more than a few pages describing the terms and conditions of the loan, provide contact information with a telephone number, address, and often provide a "Live Chat" feature.

Although a payday loan is designed to be repaid next payday, many people find they are unable to do so and must extend the loan until their next payday. When a loan is extended or "rolled over" it generally involves another fee payment. Sometimes this interest payment is considered a fee. For example, with a $400 cash advance you could pay a $50 fee to extend it a couple of weeks. The average borrower generally repays their loan after two weeks. The rest generally repay their loan after an additional two weeks. Borrowers not familiar with cash advance loans may ask themselves, "How does one extend their online payday loan?" There are several options:

1) Make your payment by direct debit from your bank on payday

2) Make certain that the debit date you selected is set for your payday, or as close as possible to it

3) Ensure you have money in the bank when the payment is due

4) If you are paid on a certain date each month make the direct debit for that date.

Most lenders will allow borrowers to extend up to a month. (Borrowers should speak with their lender before assuming this)

If your payday is a Saturday or Sunday and you have direct deposit, you will generally be paid on a Friday, so arrange the debit authorization for your online loan for Friday. If you have taken the loan out close to payday, you might have made an arrangement to pay next payday: in that case the same arrangements will apply.
Most cash advance lenders do not allow the borrower to pay off the loan in installments. A cash advance is designed to be paid off in a single term. Again, extensions or rollovers exist, but borrowers are generally only paying interest to defer the payment. If a borrower is looking for a loan with installment repayment terms, they should seek out an installment, not a payday lender.

However, payday loans have many benefits if you are able to make the payment at the right time. Cash advance loans are quick, have few underwriting terms, can be directly deposited into a bank account, and are a cheaper alternative to costly bounced check fees and overdraft protection programs. Borrowers can often obtain money for as little as three days and as long as a month or two. Any longer than that, and consumers should consider a longer-term solution.

Borrowers should look for online cash advance lenders who adhere to the CFSA best practices. These guidelines were established to protect borrowers from unsavory online lenders. CFSA lenders display the organization's blue and white oval logo on their web page. If you don't see this logo, find another lender who promises to give you additional safeguards.
There are many short-term payday advance lenders online offering their services. Borrowers should use these guidelines to ensure they are dealing with a scrupulous online provider. Too often consumers fail to diligently seek out the best lenders and are often forced to deal with a lender who doesn't have their best interest in mind.
About the Author
Michael New Jr. is an authority in the financial industry. He has written hundreds of articles relating to consumer services and Payday Loans.

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Michael New Jr.
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