Common Questions About Payday Loans
Payday loans, also called cash advances, are small, short-term, high-interest, usually, at usury rates, cash loans are repaid on the next paycheck day. They are meant to help consumers obtain some fast money to hold over until their next payday, so the title payday loan. Payday loans also are known as post-dated check advance, deferred deposit payday, check advance, or cash advance loans. These are unsecured loans with no collateral or credit check and are usually only approved within 24 hours of applying.
Like other small personal loans
payday loans require certain basic requirements to qualify. To be approved for this type of financing, borrowers must be at least eighteen years old, employed in a position that earns at least twice the minimum wage, not currently delinquent on any federal, state, or local tax obligations, and have a checking account in good standing with a balance exceeding what can be borrowed. These basic requirements alleviate the risk to the lending company, as they are unlikely to default on the loans. Borrowers may be required to show proof of income or employment, but this isn’t always necessary. Most lenders are interested in credit history, though, as well as proof that they have an active checking account and can make the repayment of the loan on time each month.
Lenders will require that the borrower’s supply
them with their social security number, date of birth, address, phone number, and employer. In most states, proof of residence is also required, though this is not always true. In some states, lenders may request other types of documentation, such as copies of pay stubs, bank statements, utility bills, and the like. When shopping for payday loans online, it’s important to shop multiple lenders to ensure that you get the best interest rate available. Since some companies charge application fees, it’s a good idea to comparison shop as many payday loans companies as possible to ensure you get the best deal possible.
When applying for payday loans online
you may also be required to provide information about your previous debtors. This information could include their names, addresses, phone numbers, fax numbers, email addresses, or other contact information. Some companies prefer to have at least one debt to loan relation per person, although some lenders allow only two people to have one payday advance, with the second borrower using a non-standard checking account. For example, they may require one person to have a savings account, while another person has a checking account. The purpose behind this is to separate those with high-risk unsecured credit, such as borrowers with bankruptcy, from those with less-risk unsecured credit.
Borrowers are encouraged
to carefully read the terms of the repayment plan before signing on the dotted line. Payday loans offer borrowers a lot of flexibility in terms of how they can repay the money. They can choose to pay their payday loans within two weeks, two months, one year, or an extended period of time depending on how much they borrow and how quickly they need the money. However, borrowers are encouraged to make sure that the repayment plan is easy and manageable, especially if they are already struggling to make their other monthly payments.
Payday loans are convenient and quick to obtain
but they are not meant for long-term lending. Once the loan is paid off, the borrower is typically required to pay an extremely high fee, referred to as an “entrance fee.” This fee is charged even if the payday loans are repaid within two weeks. Borrowers need to realize that payday loans carry some risk and should be used following their terms. Because they are meant to be short-term solutions, borrowers must be certain that they can repay their loan without straining their bank account.