It is obvious that the payday lending business is booming and there are payday loan offers that seem to be everywhere! People are generally concerned and confused about the reliability and trustworthiness of payday loans. You would first have to know all about these loans before you decide to go in for one.
A payday loan is actually a small loan that does not need a credit check. These loans are for a maximum amount of $500 to $1000. These types of loans have to be paid or returned as quickly as possible within the few pay periods stipulated, as they have short terms. Payday loans are usually marketed in such a way as to tide you over and cover expenses until your next paycheck. Therefore, they are also called "deferred deposit", "check cashing" and "payroll advance" and are a great way to get emergency cash. It is important to note that most Payday Loan lenders are not bonded, licensed, or regulated by consumer laws.
Payday loans can turn out to be costly, and ought to be availed of only in case of an emergency. The objective should be to pay back the loan as quickly as possible. The reason for this is that these loans are priced at a dollar fee that is fixed and which is the finance charge to the person borrowing the money. The borrowing cost is very high as payday loans have short terms. The borrower has to give the lender a debit authorization or a pre-dated check.
Payday Loans work fairly easily. You have to pay the lender the borrowed amount including a finance fee by a post dated check payable to the lender. The information can be entered online when you apply for a payday loan through the internet. It is important to note that if at the end of the term the amount is not repaid in full, then there will be additional finance and fee charges.
If you have a checking account and a steady income then it is easy to get a payday loan. However, it is noticed that people who do not have access to savings accounts and credit cards usually use payday loans. Since this type of loan does not need a credit check, it is easy to avail of this lending service and people who do not have credit problems or credit will turn to payday loans. New immigrants and military personnel commonly use these loans.
Payday loans are a good tool for easy borrowing and quick cash during an emergency, especially if you do not have any other financial options. For example, temporary financial needs like medical bills or even car repairs etc may be covered by payday loans. The only factor that is of paramount importance regarding these quick and easy payday loans is that it is crucial that repayment is made as soon as possible. People do get into trouble if they do not repay the loan and are charged additional fees that are expensive at the end of the term. This way there is a risk of getting caught in the payday loan cycle for a long time.