What is a Payday loan?
Payday loans, also called cash advance loans, post-dated check loans, payroll advance loans, and deferred deposit check loans, are short-term loans that allow people to access cash before their next paycheck. Payday loans are especially useful in the case of emergencies such as medical expenses, car repairs, or important one-time payments.
How do Payday loans work?
Payday lenders provide borrowers with a payday or cash advance loan in exchange for a post-dated check which is used to pay off the loan and interest expense at the end of the loan period. If the borrower is unable to pay off the loan at the end of its period, the lender will place additional fees on the loan.
How long does the Payday loan application process take?
The payday loan application process takes just minutes to complete because applicants are only required to provide basic documents and proof of identity.
What are the basic requirements for a Payday loan applicant to be approved?
Most lenders simply require applicants to be at least 18 years of age, have a steady income, a checking account, and related documents as proof. Some lenders have additional requirements for borrowers, such as a minimum salary of $1000 per month, residency status or a home phone line. Please check with your payday loan lender to clarify his or her specific requirements for approval.
How long is a typical payday loan period?
30 days is usually the maximum length of a payday loan period, however, most lenders require borrowers to pay off the loan at the time of their next paycheck.
When should Payday loans be used?
While payday loans are an easy and convenient way to access money in times of need, borrowers should only use them for emergency situations and not for unnecessary expenses.
Why are Payday loans popular among some people?
Payday cash advance loans are most suitable for people that do not have a credit card or savings account. Payday loans are also quite popular among people that have bad credit.
What are the advantages of a Payday loans?
Payday loans are beneficial to people in need of fast and easy cash without a lengthy application process. Applicants for payday loans also have little requirements for approval compared to applicants for other types of loans. Applicants are not required to have good credit nor a credit card or savings account to be approved for a payday loan.
What are the disadvantages of Payday loans?
Payday loans are high interest loans which makes this type of loan an expensive method of borrowing. Payday cash advance loans are also short-term loans requiring borrowers to pay off the loan at the time of their next paycheck. If borrowers are unable to pay off their payday loan at the end of the loan’s term, borrowers will be faced serious consequences such as being reported to the Credit Bureau and charged additional late fees on the outstanding payday loan.
Do lenders charge additional fees on Payday loans?
Fees vary by lender and loan amount. To find out more about payday loan fees, ask your lender to outline all details associated your payday loan.
What does APR mean?
Annual Percentage Rate (APR) is the percentage used to figure out the total cost of your cash advance loan because it takes into account all additional fees charged on your loan, including processing fees, underwriting fees, document-preparation fees, origination costs, and other costs associated with payday loans that you may be unaware of.
Do lenders provide discounts on Payday loans?
Some lenders provide discounts to repeat customers. To find out more about payday loan discounts, ask your lender to outline all details associated your payday loan.
Are there any laws that protect Payday loan borrowers?
The Truth in Lending Act was established to protect borrowers by prohibiting false and misleading behavior in the financial lending industry. The law requires lenders to reveal all costs associated with the payday loan to help borrowers make educated decisions.
What can cause an applicant to be denied approval for a Payday loan?
Applicants can be denied if he or she is unable to show proof of identity, employment or income. Applicants can also be denied if he or she does not have a checking account, has recently filed for bankruptcy, has a history of over drafting checking accounts, or has an outstanding cash advance loan that has not been paid off. Please check with your payday loan lender to clarify specific conditions that may result in the denial of your application.
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