What is a Payday Loan - Really?
An advertisement that can be seen most often on televisions, heard on radios etc is the easy availability of payday loans, quick cash advances etc. This trend is fast catching up and more and more people have started taking these loans to tide over a crisis before payday.
What exactly is a payday loan? Payday loans - Frequently Asked Questions also known as payday loan advances quick cash advances etc., are short-term loans provided by lenders at a very high rate of interest. Usually payday loans are loans provided up to $500. The money borrowed along with the interest has to be paid on the next payday. Suppose a person takes a payday loan of $100. He has to pay the amount back along with interest on his next payday. The amount he will return could range between $112 to $120. This may seem a small amount for the services rendered. However if it were calculated on a per annum basis the rate of interest is huge.
Payday loans are easy to get and very handy for people who are in debts, or for people who need money urgently and do not have any source at the moment. Payday loans are available online as well and some websites approve payday loans almost immediately.
A person taking a payday loan must sign a post-dated check and provide it to the lender. The lender then pays you the loan. Some lenders also have a provision of rolling over the loan. In that scenario the person must come and provide a check for the interest accrued and also a new check for the next payday.
What do you need for obtaining a payday loan?
Payday loans are easy and readily available. It does not matter whether you have a good credit history, a good credit score or a bad credit history, a bad credit score or for that matter, if you have do not have any credit. What matters is that you should have a job that pays you at least $1200 per month. You should be at least 18 years of age and a citizen of the United States of America. And lastly you should possess a checking account. The lenders never ask for any collateral. All they require is a check dated on your next payday. The check acts as the collateral.
Scouring for the right lender who provides payday loans:
You should be clear regarding the amount you require for the loan and the capacity for paying back. Once you know how much you require, you should start scouring for lenders who provide payday loans. You can search in your city or you can search the web. A lot of payday loan providers have websites and even sanction loans online. Your research should include details like the background of the company that is lending the amount. The number of years the company has been in business. Whether the company has a state license for providing loans. Consider their rates and see if they are practical. You should also read the documents carefully before signing.
The benefits of payday loans are:
It is a quick way to get a payday cash advance. The major attraction for getting a payday loan is that you can get the loan almost immediately. If you have to pay a debt on the morrow and need cash in your bank account, the best and easiest possible way is to get a payday loan.
Payday loans are easy to get, no messing with credit reports to find the credit score. All you need is a job that pays you at least $1200 per month and lo and behold you get the loan. Since Payday loans do not need credit checks your credit score will be as it is as there would be no queries asked.
Payday loans are also known as short-term loans and since the amount loaned is for a short term and that too until the next payday, the interest is fixed and the payment is made on time. This is a benefit as you may be inclined to pay just the interest and roll over the original amount. In some cases lenders have a proviso wherein the original amount is rolled over if you pay the interest.
The disadvantages of payday loans are:
Payday loans have a huge interest rate. Consider the fact that for a meager advance of $100, the lender earns interest ranging from 12 to 20 percent. As a one-time fee it may seem to be minimal but if calculated on a yearly basis it amounts to a huge interest rate.
Never roll over your payday loan. If you rollover your payday loan it could become a habit and without your knowledge you would be knee deep in debt.
Payday loans might hamper your other financial deals and by paying your payday loan you might miss out on the payment of your mortgage. This could eventually result in your getting a poor credit report.
These are just some of the benefits and disadvantages that came to mind. There may be others as well. It is advised that you go through all the pros and cons before deciding on a payday loan.
Payday loans though attractive should not be an option. The best way to be rid of any loans is to plan for the future. If you have healthy saving in your bank, the need for payday loans or for that matter any other loan might not arise. Saving is a virtue and everybody should start saving for the rainy day. If a person makes a note of all his income and starts living within his known income, the need for payday loans will not occur. Payday loans are proving to be a debt trap for many and if you manage your finances properly, you will not only not need loans but your credit worthiness and your mental state will be fine.
What exactly is a payday loan? Payday loans - Frequently Asked Questions also known as payday loan advances quick cash advances etc., are short-term loans provided by lenders at a very high rate of interest. Usually payday loans are loans provided up to $500. The money borrowed along with the interest has to be paid on the next payday. Suppose a person takes a payday loan of $100. He has to pay the amount back along with interest on his next payday. The amount he will return could range between $112 to $120. This may seem a small amount for the services rendered. However if it were calculated on a per annum basis the rate of interest is huge.
Payday loans are easy to get and very handy for people who are in debts, or for people who need money urgently and do not have any source at the moment. Payday loans are available online as well and some websites approve payday loans almost immediately.
A person taking a payday loan must sign a post-dated check and provide it to the lender. The lender then pays you the loan. Some lenders also have a provision of rolling over the loan. In that scenario the person must come and provide a check for the interest accrued and also a new check for the next payday.
What do you need for obtaining a payday loan?
Payday loans are easy and readily available. It does not matter whether you have a good credit history, a good credit score or a bad credit history, a bad credit score or for that matter, if you have do not have any credit. What matters is that you should have a job that pays you at least $1200 per month. You should be at least 18 years of age and a citizen of the United States of America. And lastly you should possess a checking account. The lenders never ask for any collateral. All they require is a check dated on your next payday. The check acts as the collateral.
Scouring for the right lender who provides payday loans:
You should be clear regarding the amount you require for the loan and the capacity for paying back. Once you know how much you require, you should start scouring for lenders who provide payday loans. You can search in your city or you can search the web. A lot of payday loan providers have websites and even sanction loans online. Your research should include details like the background of the company that is lending the amount. The number of years the company has been in business. Whether the company has a state license for providing loans. Consider their rates and see if they are practical. You should also read the documents carefully before signing.
The benefits of payday loans are:
It is a quick way to get a payday cash advance. The major attraction for getting a payday loan is that you can get the loan almost immediately. If you have to pay a debt on the morrow and need cash in your bank account, the best and easiest possible way is to get a payday loan.
Payday loans are easy to get, no messing with credit reports to find the credit score. All you need is a job that pays you at least $1200 per month and lo and behold you get the loan. Since Payday loans do not need credit checks your credit score will be as it is as there would be no queries asked.
Payday loans are also known as short-term loans and since the amount loaned is for a short term and that too until the next payday, the interest is fixed and the payment is made on time. This is a benefit as you may be inclined to pay just the interest and roll over the original amount. In some cases lenders have a proviso wherein the original amount is rolled over if you pay the interest.
The disadvantages of payday loans are:
Payday loans have a huge interest rate. Consider the fact that for a meager advance of $100, the lender earns interest ranging from 12 to 20 percent. As a one-time fee it may seem to be minimal but if calculated on a yearly basis it amounts to a huge interest rate.
Never roll over your payday loan. If you rollover your payday loan it could become a habit and without your knowledge you would be knee deep in debt.
Payday loans might hamper your other financial deals and by paying your payday loan you might miss out on the payment of your mortgage. This could eventually result in your getting a poor credit report.
These are just some of the benefits and disadvantages that came to mind. There may be others as well. It is advised that you go through all the pros and cons before deciding on a payday loan.
Payday loans though attractive should not be an option. The best way to be rid of any loans is to plan for the future. If you have healthy saving in your bank, the need for payday loans or for that matter any other loan might not arise. Saving is a virtue and everybody should start saving for the rainy day. If a person makes a note of all his income and starts living within his known income, the need for payday loans will not occur. Payday loans are proving to be a debt trap for many and if you manage your finances properly, you will not only not need loans but your credit worthiness and your mental state will be fine.
About the Author:
Need money well look no farther now you can Apply Online for a Canadian Payday Loan For more information see http://www.bchighway.com/financial-planning/payday-loan.html
posted by Credit Counseling at
10:22 AM
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