Payday installment loans are suitable for urgent needs for quick cash. Due to the convenience of these loans, most borrowers fail to read the loan agreement diligently. Many payday installment loan lenders; however, do not thoroughly explain the contents of their loan agreements. So, it is important for borrowers to read all the fine print in their loan agreement before signing to avoid future complications.
Reading all the fine details in your loan agreement will not only protect you from some predatory practices of lenders, but will also help you know your rights as a borrower. As a consumer, you need to know every detail about the information and terms in your loan agreement. Here are some provisions of a loan agreement that you need to be aware of:
· Contact Information of the Lender
The lender’s contact information should be stated clearly in your loan agreement. This should include the lender’s company name, address, phone or fax number and an email address. This information is important in case you have inquiries or need assistance.
· List of Interest Rates and Other Fees
Your loan agreement with your lender should include a list of interest rates and other fees. This must be stated clearly and completely. It is even more preferable if your let your lender explain these terms to you. Let your lender calculate the exact amount you need to pay per month for your installment loan. Also, let your lender discuss the fees for late payments or bounced checks and what options they offer to avoid this.
· Payment Obligations
The repayment schedule and extensions must be clearly explained in the loan agreement. Ask your lender if there are additional fees for payment extensions and other options they can offer in case of payment default. Also look for the statement: “You cannot be prosecuted in criminal court for collection of this loan.” This statement is important because it means that you can’t be arrested for not paying your loan.
In many contract or loan agreements with payday installment loan lenders, not all of the terms and conditions are clearly stated or emphasized. These hidden terms may only be revealed after the borrower has signed the loan agreement. Don’t be surprised if you haven’t read your loan documents and you are asked to pay for fees that you were not aware of before. There are different regulatory laws that have been implemented to keep lenders from abusing consumers. Lenders are required to include a disclosure box stating clearly all the terms and conditions in a loan agreement. Be sure to read this!
Nevertheless, it is still in the hands of the consumer to prevent lenders from preying on their financial woes. Before taking out an installment loan, you need to examine your loan agreement carefully to protect yourself against untrustworthy lenders. You need to know the legal and illegal terms included in your loan agreement. Here are some illegal entities that you need to watch for before signing an agreement with your payday installment loan lender:
· Annual Interest Rates
Different states have different provisions about how much lenders can charge on interest rates for payday installment loans and other short-term cash loans. However, most states cap interest rates.
· Membership Fees
Some lenders charge a one-time membership fee, usually $10 to $15, to first time borrowers. Before paying, check with your state laws if this fee is allowed and legal.
· Service Fees
Although service fees are permitted by most states, there is a maximum limit. If the lender charges you beyond the limit stipulated by the law, you can take a legal action. Service fees are charged for loan processing, verification, handling, and origination.
· Rollover, Renewal, or Extension Fees
Before you get a payday installment loan, it is important to know your state laws regarding the maximum number of rollovers, renewals, or extensions your lender is allowed to give you. Beware of lenders who want to roll over or renew you loan several times more than the maximum legal limit.
If your loan agreement does not contain or state clearly the necessary information or may contain illegal entities in violation of the stipulated laws regarding responsible lending, you’d better not sign the loan. Look for lenders or payday installment loans that offer terms that are trustworthy.