Payday loans have gotten popular today. Have you tried obtaining a payday loan or are you going to have one?
If yes, this article presents the basic facts that you need to understand about this type of financing.
Payday loans are short terms loans which are payable within 1 month.
For people who need immediate cash, a payday loan might be a viable solution. This is why payday loans are also referred to as cash advance loans. Others consider it like a quick loan obviously since it involves easy and quick process.
One reason why it is much easier to get a payday loan is because no credit check is required.
Lenders do not conduct credit check to determine whether the applicant deserves an approval or not. In fact, anyone, regardless of credit history or credit score can get approved for a payday loan. Does this mean no other prerequisite is required?
The specific prerequisites may vary from one lender to another.
Typically, most lenders only require that the borrower be of legal age or at least 18 years old; be a legal a resident of the United States; must have an active checking account; and must have stable employment. Some lenders will demand the borrower to issue a post-dated check to ensure that the loan will be paid back on time.
Indeed, payday loans give borrowers the chance to get the cash advance they need as they wait for their next pay check. However, payday loans are not recommended for all kinds of financial needs and definitely not advisable for paying other debts. Borrowers are also discouraged from taking out multiple payday loans from different lenders at once. Take note that the amount you incur on interest rates alone is enough to put you in a serious debt situation.
Despite the ease of application, bad credit payday loans carry steep interest rates which can range anywhere from 100% to as much as 300%.
In States where payday lending is not regulated, some lender may impose excessive rates and penalty fees from borrowers who fail to submit their payment on time. As a result, acquiring one payday loan can quickly lead to uncontrolled debt.
In some States, payday lending is considered illegal.
However, borrowers can still get cash advance loans from lenders that operate in States where payday lending is accepted through the internet. This is because, the loan application can be submitted online and once approved, the cash advance is sent through electronic money transfer.
In most States where payday lending is accepted, the loan amount is limited up to $1,000 or less.
When applying for a payday loan, it’s very important to check the lending company’s background and reputation. Take the time to read the fine print and make sure that the lender complies with the State law.
Last but not least, borrowers who acquire payday loans must ensure that they will be able to submit their payment by the due date to avoid accumulating interest rates and penalty charges.