In that article you will find some basic information on Payday Loans. Today, taking a loan is no longer considered a uncommon thing to do. Banks and other financial institutions are more than ready to give you a loan so that they can earn interest on it. As you know that applying for a loan getting it processed and then getting the money takes a long time. What happens if you need some urgent money to pay for a car repair, or for a short holiday? What will you apply for so that the money reaches you faster?
The answer to that is to apply for a payday loan. It is a short term loan which is of a small amount to meet some urgent need or requirement. The laws for the same differ from one place to another but usually it does not take more than 2 weeks. These loans can be made by check cashers, finance companies and others. Sometimes they are called as a cash advance loan, a post dated cheque loan, or a cheque advance loan.
To apply for a pay day loan, all you need is to be an employee with an organization, have a proper personal account, earn a salary that is above a certain limit , be a citizen of the country you are residing, and lastly be above 18 years of age.
The important thing to note here is that once you receive the next paycheck, the amount which has been lent out to you would then be debited from your account and credited to the lenders account. Furthermore, like any other loan, an interest rate would apply here too, so the key is to make sure that the loan is applied for when you need small amounts of money. The larger the amount, the more is the interest rate.
However, once you feel that you meet the criteria for the application of such a loan, the next step is actually applying for one. An online application form would need to be filled up here, on a bank or lender website.
Having a good credit history would only hasten the process of getting a payday loan. In the form, there would be details such as proof of employment, proof of identity, details of residence etc which need to be filled out. Usually, a lender would take not more than 2 hours to approve the loan, and the amount should be transferred into your account over the next few days. In some cases it may take not more than 2 weeks.
Taking a payday loan offers quite a few other features
- Since the purpose of the loan itself is to meet an immediate expense, these loans do not take a long time to get approved.
- Having a good credit history and score would of course make things faster for you, but not having one does not mean you still cannot apply for such a loan.
- There are no specific reasons which need to be given as far as the reason for applying for such a loan is concerned. It could be for anything ranging from paying an electricity bill or for taking a holiday.
- The repayment period is also not fixed and obviously differs from person to person. But remember that the higher the amount the higher would be the interest rate too.
- Since the process is usually done online, there is no need for huge documentation and other formalities.
- Also, most banks would not look at giving a loan to a person with a bad credit history, but in the case of a payday loan, that would not apply.
- Lastly, in case you feel you do not need the payday loan at all, and want to have it cancelled before it reaches your account it is possible to do that too.
The important thing to do here is to ensure that the lending rates of atleast six different lenders are compared, properly before you settle on one. Different lenders have their own clauses and conditions which need to be fulfilled so knowing that before you taking one is advisable. There are a few advantages and disadvantages of taking such a loan. First disadvantage would be the interest rate that you pay for a small amount which could be quite high considering that the money is being given without much formality and in a short time.
On the other hand, if there is failure on your part to pay back the loan, then it could mean a legal action against you for the same. Taking too many payday loans at the same time might be good enough to send you filing for bankruptcy too. Then again, if your job is that of a seasonal, temporary or a contract employee, you would not be eligible for the same as you are required to have a steady job with a steady income for the same.
Let us look at the advantages of the same too. First of all the concept of a payday loan should be understood. It is supposed to be a short term loan meant to cover emergencies. A lot of times, people remember the fact that the loan reaches you quickly, and apply for huge amounts , which is really a mistake. The purpose of such a loan works well, when it is used to cover some kind of an emergency. Then of course, there is the ease of availability, which is enticing.
There is not much documentation needed here, and a loan can be granted without any hassles at all. In fact, no other loan would reach you in such a short time. Having a bad credit history does not reduce your eligibility for such a loan. Once you have found the right lender, you could also speak to the concerned person about what kind of a repayment period would suit you. Lastly, unlike a proper loan, which cannot simply be cancelled at any point of time, a payday loan can be cancelled, before the money from the lender reaches you.