In the current economic climate, alternative means of making ends meet are becoming increasingly necessary. Some options include borrowing money from friends / relatives; Cash advances from employers, personal belongings and pledging payday loans. Also known as check cash advance loans or deferred down payment check loans, the payday loan is the most popular among them. As payday loans that are in popularity, more and more people want to know what a payday loan is and if it is the right solution for their situation.
So what is a payday loan?
A payday loan is an unsecured, short term loan ranging from anywhere from a few hundred dollars to fifteen hundred dollars in some cases. A borrower usually secures the loan by mailing out a check for a certain amount of money intended to be paid against their account on their next period. Payday loans are designed so that in situations where you need quick cash, an unexpected bill or an emergency situation until your money comes through or is made available.
A payday loan is not a revolving line of credit. It is short term and that is a crucial factor in this type of loan. The idea is that the loans are used to finance a small bump in the street or to smooth rough financial edges until your next payday. If you are thinking of using payday loans as a way to repair a much bigger financial problem, the advice is to STOP! A payday loan can cause major problems along the way when troubled as part of an overall cash flow situation.
The most important thing to remember about payday loans is that they must be repaid over time to avoid crazy fees that may be equal to or exceed the amount of the loan itself! It is the extension of the loan and the repayment not on time that can be a significant financial dilemma for the borrower.
Most loans have a term of four to eighteen days, depending on the negotiations with the lender. The repayment schedule and the type of repayment is at the time the loan is paid off. In most cases, the borrowers will have to pay the loan in full with cash on or before the due date. Additionally, some lenders will collect the opportunity for the loan by depositing the borrower after the check against his bank account on a mutually agreed upon date.
With payday loans, there is a fixed rate of repayment calculated on each loan paid out. The average is $ 15.00 to borrow $ 20.00 per $ 100.00 borrowed. Due to the nature of the fast turnaround time of payday loans, the APR or APR is usually very high. It is not uncommon for the (APR) to be 100%, 200% or even as high as 400% in some cases.
If a borrower is unable to repay a loan in the scheduled time, the financial institution may agree that the rollover loan has more time for repayment. The disadvantage with the rolling resistance of a loan is that additional fees will be added to your account. For example, if the fee to borrow $ 100.00 is $ 15.00 and the borrower extends the loan three times, then the new fee would be $ 60.00. That is the original $ 15.00 plus three times that the fee borrowed itself to every $ 100.00.
What Are the Requirements for a Payday Loan?
Generally speaking, the only important requirement for a payday loan is that you have a job. Your job is your assurance that you will be able to repay the loan. It is expected that you will receive a paycheck, and therefore, the money to cover the loan. Good solvency is not required, or even approved for payday loans. The bank just wants to see that you are busy and have a regular income. In essence, your job is your safety
A payday loan is actually an easy procedure. They apply, and if accepted, indicates that paperwork signs your promise to repay the loan to the lender’s terms. Make sure you take the time to carefully read the terms of the loan and don’t be afraid to ask questions about what these terms mean. Often these types of contracts are legalized in a financial jargon that is not easily understood by the average consumer.
If you believe that the representative’s lender is unable to fully answer your questions, please say so! If the terms of the loan are not clear to you, not the loan until you fully understand it. Teachers always say that this is just a stupid question, the one you don’t ask. This is true! Even if you do not understand the terms of the loan, do not sign paperwork until these terms have been fully explained. Otherwise, you are required by law that these terms and conditions could prove fatal to you if you fail to act in accordance with the terms of the loan. We would like to believe that everyone is overboard, but not all lenders. Unfortunately there are unscrupulous lenders out there who intend to make a profit at your expense.