Some refer to payday loans as cash advances. This type of loan may or may not be provided by your workplace. In some states, the practice of such transactions is not allowed. There are legit companies, though, and some are online-based, that offer payday loans.
Payday loans are cash loans that one can easily apply for and avail but beware. It has a very high interest rate, usually borderline usury, and if not on the level already. While it may be quickly transferred to your bank account or readily given to you in person by a creditor, it is a loan that requires your thinking and informed decision-making. It is called a payday loan because you are expected to pay it on your next payday. So, in roughly two to four weeks, the $100 you loaned from a creditor will have to pay $130.
Interest Can Go As High As 30%!!!
Yes! The interest rate is very high. This type of loan is for those in desperate need of money, and if you cannot pay on the said date, there will be charges like non-payment fees, and rollover charges, and such. But not all firms charge 30%. If you plan to apply for this type of loan, check payday loans online for the lowest interest rates.
Why Some People Need A Payday Loan
Reasons vary from one person to the other, but in most cases, here are the top two reasons as to why people avail of such:
– Emergency expenses like medical bills or car repair expenses that are not on the budget.
– Spending spree or holiday shopping which is again not on the budget.
Application Process Of A Payday Loan
Assuming you have thought about it, have an organized plan of repayment, and need a payday loan, here is the usual application process:
- You must find a reputable payday loan service provider online that pushes for a minimal interest fee on the debt. What is minimal? 10% of your payday loan is considered a low rate since some firms require as high as 30%. Be very careful at what forms you fill up and sign. Make sure you can pay for it on time.
- You will need to secure the following information and documents before you fill out an application form online.
– Permanent home address or proof of billing address
– Recent payslip or income certificate showing your proof of earnings
– Social security number
– Active current account (You must have an active checking account to qualify for an application for a payday loan.)
– Valid identification
These documents must be uploaded to the creditor’s site together with your application for a loan. They can reject you at any time if these documents or requirements are not met.
- You have to be at least 18 years old to qualify for a payday loan.
- You must have part-time or full-time work and the ability to pay the payday loan. Some creditors still provide payday loans for unemployed individuals, but approval is on a case-to-case basis.
- You must have the money in your checking account when the due date comes if you want to maintain a good credit score and remain stress-free.
Payday Loans Can Be Very Stressful
Let me tell you a story about Marie and her experience with a payday loan poorly gone. Her child had an accident, and of course, some bills were not covered by insurance. Marie had to shell out $200 on the spot that she did not have. A friend endorsed her to a payday loan firm, and she applied in haste. Since payday loans are easy to get approval, Marie and her complete requirements, was able to avail of the $200 after 15 minutes. She did not read the terms and conditions as well as she should have.
In two weeks, Marie had to pay the $200 primary loan and 30% interest! She was forced to roll over the loan on the next payday because she could not pay the $60 interest fee. What Marie did not know is that once you roll over a loan, there is a rollover fee and, of course, additional interest!!! She was so stressed out because, in one month, Marie had to pay $120 for interest alone. There is a $30 charge for the rollover fee, and there is still the $200 loan.
It is a good thing, though, that a friend of hers could loan her the whole amount, and she was able to pay the firm with it in full. Her friend said she could pay $50 each time she would get her salary so that she could breathe. Marie swore that she would never fill out and sign an online loan without reading it carefully, thinking how to pay it back, and sticking to the payment due date. If not for her friend rescuing her, Marie could have been in trouble. Of course, she only did it out of desperation, but still, it is not a helpful excuse.
Conclusion
There is no such thing as easy money. While payday loans may be easy to avail, the consequences can be significant. The fees are high, and they will get higher if you do not pay on time. And so, to reiterate, choose a firm with the lowest interest fee, read the terms very well, and pay it on the next payday. Payday loans should be your last resort.
