subject: Payday Loans No Faxing - Boon For Lower Income Groups [print this page] Payday loans have much to do with their namesake, these loans are usually small, unsecured and are usually targeted at the lower income groups, who pay them back the next month on their payday. These loans are of an easy option for the people with minimal assets and securities. Pay day loans otherwise known as cash advances are for a short period of time, mostly assuming 3 to 4 weeks and carry an interest structure like most loans, called the annual percentage rate. However, in most countries where pay day loans have a presence; there also exists some sort of a regulatory, mostly government appointed body that keeps a close watch on the effective interest rates.
Pay day loans can be acquired through the simple tender process associated with most loans and as with pay day loans one could walk into one of the many pay day loan stores and get themselves a loan. Mirroring most loan processes pay day loan approval undergoes customary verification of the borrowers employment and salary slips. These days, however, online pay day loan services have come into being with the loans disbursed directly into the borrowers bank account after the customary verifications.
In most countries, pay day loans are blamed to reap exorbitant interests from the poor and the underprivileged. This, however, is not the case always. A study puts default rate in pay day loans between 10%-20%. Most pay day loan companies being small back end operations, the lenders find it all the more hard to retrieve deferred loan payments.
Though pay day loan lenders are alleged to charge insurmountable rates of interest, most countries have stringent rules that govern pay day loan interest rates. For example in Canada, the government has imposed an annual percentage rate of 60% on pay day loans in the country, with criminal proceedings awaiting those who are caught violating this rule. In the United States, there are 37 states in which pay day loans are legal while the others have imposed a ban or not backed it politically.
But above all pay day loans are of immense importance to certain communities, in a recent survey among communities that had free access to pay day loans and those that did not have them, showed significantly lower crime rates, happier environments. Pay day loans are most definitely a life saver for the low income groups, who otherwise could never fund their insufficiencies; but again these loans carry a high interest rate. When one has to pay it back by their next pay day, one most definitely feels the pinch.
