Payday Loans: What They Are And How You Can Get One
Aug 04, 2019 05:58
Your bills have just arrived and your landlord is just about to start calling you. On top of that, your house is out of supplies but you’re broke because your salary is late again. Now you’re strapped for cash so you call up close friends or family members but none is in a position to lend you money.
Don’t let depression get you because you’re going through difficult economic times. Instead, apply for a short-term loan such as payday loans.
A payday loan is a short-term unsecured loan to be repaid at the borrower's next payday. It is applicable to everyone with previous or current payroll and employment records. A payday loan could be the perfect option for you when money is tight. Learn about payday loans and how you can get one.
As long as you have a monthly paycheck, you are eligible to apply for a same-day loan. The amount of money you qualify to receive as a loan depends on your current income level. Money lending institutions use predicted short-term income to decide on qualified loan amounts.
In most cases, borrowers use wages as collateral. Your credit score and history will inform the decision on whether the applicant qualifies for the amount of loan applied. Bad credit student loans may lower your credit score leading to denied payday loans.
How to Get Same Day Loans
Individual companies have their own criteria for payday loans application but in most instances, the borrower fills out an application form stating their details and amount they wish to apply for. Applicants provide the lender with information such as their phone number, date of birth, physical address, employer, annual income and Social Security Number.
Ensure that you are comfortable sharing the information requested and be careful not to fall for scammers. Never submit your bank account secret codes and pins. The lender conducts a verification of the income, identity, employment and credit score of the borrower.
You as the loanee and the lender will come to an agreement on the payment terms including the interest rate and duration for payment. A postdated check is sometimes required as guarantee.
Sometimes an agreement is signed stating the course of action once the loan is not repaid. Failure to pay may result in increased interest or sanctions from the lending institution. That’s the traditional retail method.
Online Applications Process
In today’s digital world, we have online payday applications available on apps and websites. It’s as easy as downloading a payday loan app, filling your information, reading and accepting the terms of payment then the money is sent either through online banking or mobile transfer platforms. Repayment and the finance charge are withdrawn electronically on the borrower's next paycheck.
Research Is Vital
It is advisable to research on the available payday loans companies before committing. Check to see the duration of payment and the interest rates charged. Interest rates differ depending on the state. Regulations depend on individual states with some outlawing same day loans completely.
Competition arising from the growth of advance cash loans companies has resulted in lenders seeking incentives to attract more clients. This is an advantage as it gives borrowers more options and flexibility. Interest rates are also likely to differ across financial lenders.
Critics argue that most companies charge very high-interest rates. Lenders justify the high-interest rates due to the high risk involved in losing their investment as the general demography popular for payday checks are low and middle-income earners.
Interest and Rates Applicable
Some companies will require a loan processing fee, payable during the loan repayment. Seek clarifications of all fees charged besides the interest rate to prevent frustrations arising from hidden provisions which charge added fees to borrowers.
Witty Lenders may hide important information such as payment dates and options available for payment. Be sure to ask everything and insist on a written document. Work hard to try and pay your loan earlier than the due date.
Ask what happens if you don’t have the money by the date it’s due. Some lenders will let you extend the payment date at a cost of course. Ask to know the amount charged if you feel that your payment might experience a delay.
Same day loans are convenient especially during emergencies like car repairs and healthcare. It is important to understand the terms of the loans to avoid exploitation. Lenders perform a soft check to check credit rating as opposed to hard check performed by banks.
The loans require short payment durations ranging from weeks to a few months. Payments charged include the principal amount given and interest agreed. Any other charges should be discussed during the application process.
Failure to repay may lead to your lender forwarding you to your bank and your credit score suffers as a result. It is vital that you understand what you stand to lose by delayed payments. Don’t agree to any terms and conditions until you have understood and are very sure.
Penalties Charged on Payday Loans
Find out if your lender charges penalties. Most institutions charge a certain percentage of the entire amount or a certain fee incurred dairy for delayed payments. Check if the lender offers a repayment plan such as installments as opposed to one-time payments.
Note that every bounced check will attract overdraft fees from your bank. Inform the lender when you are not able to pay on time. If you feel that the interest charged for defaulting exceeds your budget, try alternatives like seeking advance payments to sort out the payday loan, credit card overdrafts or personal loans from the bank.
Are You in Need of a Payday Loan?
Money lenders are aware of the desperation at the time of borrowing and some might seek to take advantage of you. Other lenders have multiple complaints lodged against them online so do thorough research before making a decision. This will help you identify payday loans scammers so be keen to choose alternative loan methods if you are uncertain.
Keep reading our blog for more tips and information on how you can improve your finances.
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