Are Payday Loans The Right Solution For Your Financial Emergency?
Everyone from time to time find themselves in a financial bind in one sort or another
. During these times we may often make rash decisions about how to fix the situation in the best possible manner. One of the solutions that many people use our payday loans. Borrowing money from these types of institutions can be the answer to an emergency financial situation, but one must understand exactly what the loan entails and also whether or not the cash lender has a good reputation.Every city has many businesses offering what are called payday loans. Borrowers are able to contact these local lenders and request short-term loans to cover their financial needs until their next paycheck arrives. These types of loans are only meant to be for 30 days long usually. And although the interest rates charged are extremely high compared to long-term loans offered by banking institutions, the total amount of interest owed after just one month of borrowing is not significant.
Most of these loans are limited to $500-$1500 at a time. Also, many state laws prevent cash loan lenders within the state to lender the same person more than a specified amount of times. These types of laws are meant to keep people from becoming too dependent on these high interest loans for their short-term monetary needs. When payday loans are used to often, the high interest rates do become burdensome to the borrower since the rates apply for loans made month after month.
Additionally, many state laws nowadays limit the interest rates and the amount that can be loaned by the payday loan lending institutions. Before these laws were in place, there were many shady businesses who handled paycheck loans and charged extremely high interest rates even for their very short-term loaning. Many times, the paybacks required before regulation was put in place would be from 25 to 50% of the entire loan and that was only for 30 day loans.
The second thing that potential borrowers of quick cash loans need to understand is that they will have to have an active checking account before they can apply for the loan. The reason for this is that the checking account is used for depositing the proceeds of the loan into and also for making payment back to the loan company at the end of the loan. In other words, instead of the borrower having to write a check were coming in person to the loan agency, there checking account is automatically debited the total amount of the loan including the interest rates at the time specified, the payback time is usually the day of or after the next paycheck arrives into the checking account.
Although most of these types of payday loans do not require good credit or even do credit checks at all, the lending institutions do require that borrowers have a current and steady job. Check stubs from past paychecks are required during the loan application process to prove the employment of the borrower. Different states have different rules on how the lending businesses consider this employment status. Some only require employment for one month but others may require proof of employment for 3 to 6 months. These guidelines can also very depending upon the amount borrowed.
To find a payday loan lender in your area, simply go online and search the term payday loans in your city. It's always best to also check with the Better Business Bureau located in your state to see if the financial institution you are considering using has any negative references regarding their business tactics and methods.
by: Leo Kingston