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Payday Loans Explained

Everyone has experienced an unexpected financial emergency, such as necessary car repairs, an appliance dying, or a serious medical problem. You need more money than you have available, and you look for help. Many people turn to payday loans to bail them out of a financial tight spot. These loans may also be referred to as a fast loan, check advance, or a check loan, and they come with a high rate of interest.

The Process

Payday loans are available to borrowers with poor credit because the lender doesn’t run a credit check. A traditional bank loan adheres to strict lending policies and can take two to three weeks to receive approval and requires a credit history and debt-to-income ratio information. It’s possible to have your loan approved on the same day you apply. You will have to provide the following information:

. Name, address, date of birth, mobile phone, and work contact information

. Employer and contact information

. Length of employment (years and months)

. Net monthly income

. Bank account information

. Debit card information

. Payday dates (weekly, bi-monthly, monthly)

Three Features Of Payday Loans

. The loan amount is seldom more than $500.00

. Full amount is due the payday after loan is made

. Lenders require a written check for the full amount to deposit or access to your bank account to make a withdrawal when the loan is due.

Serious Business

Payday loans lenders take their business seriously and are not forgiving. You must understand that the payment will be withdrawn from your account on the due date with no exception unless you have set up an “interest only” structured installment loan. If the money is not in the bank when the lender attempts to collect, you will be charged a penalty and possibly a late fee. You will also be charged a fee by your bank, and can find your financial problems are only getting worse. Before taking a loan, be sure to consider the amount of interest you will have to pay in addition to the loan amount. Interest is very high on this type of loan and can be as much as $30.00 per $100.00 borrowed.

State Laws

The state government controls payday loans and regulates how large loans can be and the fees charged. The laws of some states do not allow payday loans or have such strict regulations that lenders choose to not to do business there.

Perform Due Diligence

When you are experiencing a financial problem, remember there are dozens of scammers looking for someone to swindle. Don’t let yourself be pulled into a scam by a fraudster that has contacted you by phone or email. These illegal lenders will ask for fees up front to cover insurance, paperwork, and processing. If you are contacted by a business claiming you have a guaranteed loan approval, do not sent them any money. Contact the office of your state’s Attorney General, and provide them with the information you have about the company. They will investigate.

There are payday lenders that can help you make it through a temporary financial difficulty as long as you are aware of all the potential risks and pitfalls. Borrow only if needed, repay immediately, and you can safely use one of these loans in an emergency.


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