When you're strapped for cash and you need a loan immediately, it's easy to turn to payday loan companies for the money. Fig Loans is one of the new small-loan companies that's hoping you'll turn to it instead of the money lender down your block. Instead of the typical paycheck advance that you can get from one of the storefront lenders that requires you pay back what you've borrowed, plus interest and fees, Fig Loans spreads out what you owe over four to six months.
The biggest difference between Fig Loans and other payday loan services is that you're likely to pay less overall for a cash advance with this company, if you're good about making your payments, and especially if you can pay back the loan quickly. Also, this company charges considerably less in combined interest and fees compared to the national average of 391 percent annual percentage rate (APR). The most expensive loans you can get are payday loans and auto title loans, which reach as high as 700 percent APR.
Fig Loans may have a significantly lower average APR, but there are some ways you can still get yourself stuck in a loop of borrowing and repaying and borrowing again. If you cannot afford a payment, you have the option of extending your loan, which tacks on extra fees, keeping you in that loop. Also, if you miss a payment, or you don't have funds in your bank account for the scheduled payment, you could be looking at late payment fees, non-sufficient fund bank fees and possibly "returned check" fees.
The trick to making a cash advance loan work from Fig Loans is to pay it off as quickly as you can. The sooner you're able to do that, the less the interest and fees will be. So, for a $500 loan, you could only be required to pay $50, if you pay it off in one lump sum after two weeks, rather than $200 or more for the full four-month terms, for example.
The other benefit of using Fig Loans is that the company reports your payments to credit agencies, so if you pay your loan off quickly and on time, it goes toward helping build good credit. Fig Loans is not a direct lender for Houston residents, but rather a Credit Access Business, so it acts as a middleman, finding the right lender for you. The fees you pay in addition to the interest rate goes to Fig Loans, and that's where the majority of the cost lies.
Fig Loans is a payday loan in some sense of the term, but it offers lower APR than the national average for payday loans, and it reports to credit agencies the good and the bad, so you could potentially build good credit with your loan.