Payday loans are usually high-interest, short-term loans designed to bail out people until their next payday. Therefore, borrowers have until the next payday to pay the loan plus interest. Nevertheless, some of the lenders allow their customers to determine the most appropriate repayment period. When a person applies for a loan, they can get between $50 and $1,000, which comes handy for people who are in need of cash. The loan offers easy money fast to take care of minor, but urgent emergencies. This type of loan is often facilitated by a payday lender, which is basically a company that specializes in convenient financial services, like utility bill paying, foreign currency exchange and license processing.
· Conditions for payday loan
Payday lenders rarely get to check the credit status of the applicants. The expediency and privacy involved in applying for this type of loans makes it an attractive option for people with a poor credit. To qualify for a payday loan, you need to provide proof of being a citizen, above the age of 18 years and being in employment. Furthermore, the application process can be performed in less than 30 minutes and the money received in no time. If the payday lender does not hand the borrower a check when they apply, they can expect to receive the money deposited electronically in their accounts, within 24 hours. When you apply, you will see a very high Annual percentage Rate (APR), but you do not have to worry about this rate because it is calculated annually, and not weekly or monthly. This means if you choose to extend your loan 26 times from the date of repaying, your interest will be based on the annual rate.
· Process of getting payday loan
Payday lenders seek to capitalize on the weaknesses of banks. Therefore, an applicant can apply for a loan online or by phone. The application process involves submitting contact information, employments information and banking information. Furthermore, the lender can ask for contacts of a few friends and family members so that if the applicant failed to repay their loan, the references can be contacted to write up a check on the amount borrowed. If you are making your application online, you need to make a pledge to pay the loan by a particular date. Payday lenders often add a fee or finance charge. The lender then deposits the amount applied for in the applicant’s account or gives a check. When the term of the loan is up, the lender debits the customer’s bank account or cashes the check.
· Tips for taking a payday loan
If you are experiencing financial challenges, payday loans offer a viable solution to pay off your emergency utility bills, car repairs, medical expenses, etc. However, if you are facing a long-term financial challenge, you need to consider other options. There are many payday lenders available in the market. Therefore, it is advisable to shop around and avoid choosing an expensive offer. Furthermore, be careful and avoid borrowing more than you can afford to repay quickly.
The lender often holds the drafted check for a stipulated term, usually 2 weeks. When the term comes to an end, the lender debits the borrowers bank account or cashes the check. This helps to repay the loan, pay the interest and settle the lender’s fee. It is important to ensure you have sufficient funds in your account. But if you cannot afford to have the check cashed, you can always inform the lenders and he will be willing to rollover the loan to another term (often another 14 days), otherwise you could end up getting an overdrawn and expected by your bank to pay costly bank charges.