How To Use A Payday Loan
However, your reasons for needing the money do not ever come up in the application process
. These loans can be used for however you choose.
It is recommended though, that payday loans be used for more of the urgent kinds of situations.
The reason for this is because it is easy to get into a cycle of borrowing and risk not paying the loan back if you get them for every little reason. The rates are high once the loan goes past a few weeks, so you do not want to take more than you can borrow or for reasons not urgent, that might put you at risk for paying large interest fees for a long time.
These loans were made to help people in the event they needed cash quickly and could not get the money from their bank, but could easily pay the loan back by their next paycheck.
The process of acquiring a payday loan is simple; a job which brings a monthly income of around $1000, an active checking account, and a valid I.D., are the only requirements that need to be fulfilled in order to qualify for an instant payday loan.
Most loan companies support online transactions; upon approval of an online application, the loan amount is deposited into the receiver's checking account.
The facility of online transactions enables borrowers to apply anytime and access the money as well as return it with minimum fuss.
A repayment plan is worked out at the time of applying for the loan. Usually, the loans are due next payday but the period of loan can be extended by paying extra fees.
Instant payday loans of up to $ 1,000 can be availed subject to the applicant's monthly income and the laws of the state. The fees involved include transaction fees and interest.
Since instant payday loans do not require a credit check or an extensive background check and are available to everybody, including those with bad credit, the interest rates are relatively higher.
Sometimes, instead of interest, lenders may charge a flat fee either by the day or for a fixed period. The average cost per $100 of the loan amount may be in the range of $15 to $20.
Lending companies are required by federal law to post an annual APR consisting of the transaction costs as well as interest rates. The borrower can use the APR to compare the rates offered by payday companies.
Online instant payday loan providers can be checked and approached without having to leave home. Several online lenders offer loans at reduced rates or with zero transaction fees for first-time borrowers.
Instant payday loans are easier to get than personal loans and their quick turnaround time makes them an attractive alternative for those in urgent need of cash.
Instant payday loans do not affect the credit score of an individual if the loans are repaid on time; multiple open accounts and use of credit can affect the credit score while using credit cards or availing personal loans.
The process of acquiring an instant payday loan involves the signing of a loan agreement by the lender and the borrower. The agreement contains the terms and conditions of the loan, contact information of both parties, fees for bounced checks and late repayment, and any obligations that are binding on either party.
Non-payment of an instant payday loan does not lead to arrest but may result in a case in a civil court, which may lead to a borrower's assets being placed on lien to recover the loaned amount and court costs.
Borrowers need to be alert to the possibility of falling into a debt cycle, since with instant payday loans this can be a very expensive proposition. It is advisable to take recourse to instant payday loans only if long-term loans are no longer an alternative.
by: Jack Landry
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