Helpful Payday Loans Guide: What It Is And How It Works?
Payday loans are an excellent opportunity to spend money until the next salary, especially for those whose credit is in poor condition. Unforeseen incidents can affect any of us, regardless of the condition of our credit. These are small short-term loans, which are usually issued for a period from two weeks to a month, until your next wage, with which you will have to pay it in one payment. A growing number of lenders are ready to offer payday loans guide to their borrowers because of their increased popularity. However, not many banks can be found that provide such loans, most often payday are handled by other credit companies, or even private individuals who have a lot of money.
When considering your application for a payday loan, the lender usually does not conduct a strict credit check, and the entire process of issuing money to you takes only a few hours. If you have everything in order with the documents and you have a regular source of income, in most cases the lender will approve your application without a credit check or with a post-check at the end of your payday loan.
Varieties of payday loans
There are several common types of payday loans. We will look at three main ones. Basic payday loan involves the issuance of a certain small amount of money to you in exchange for signing a document promising to repay the loan on time, or permission to automatically debit the repayment amount from your account on the payday. You have no rules and limits on how to spend this money. There are also targeted payday loans guide designed to pay for certain bills, such as medical bills or utility bills. Such loans do not give you the possibility to spend money for other purposes. You do not get cash on hand, and the loan amount is sent from the lender immediately to pay your bills.
Another type of payday loans involves the presence of collateral, such as a car, which will be a guarantee of your loan repayment. Since the lender does not conduct a credit check, he carries high risks, so if you cannot repay a loan, he will use your car to compensate his expenses.
Requirements for the borrower
To receive a payday loan approval, the borrower must meet the minimum requirements. You must be an adult, be a US resident, and most importantly, have a proven source of regular income. This is all that is needed, because you will have to make a payment in short time, so the lender is not very interested in your credit rating. Requirements may vary slightly for different lenders.
What happens in case of non-payment of payday loans on time?
If you find yourself in a difficult financial situation, then you will undoubtedly be interested in what consequences you can expect if you cannot pay the payday loan on time. This type of loan has very high interest rates compared to traditional loans. This is not so noticeable, because payday loans are issued for a short period, but if such a loan did not last 2 weeks, but a year, you would have to overpay the original loan amount several times. Therefore, the longer you do not pay, the more you will have to. When applying for a payday loan it is worthwhile to carefully weigh up your financial possibilities in order to prevent late payment and a rapid increase in your debt.
How to pay payday loans
You can use several ways to pay off a payday loan:
- Pay by hand. Hand to hand payment is the easiest classic standard method. Just come to the office of the lender and pay in cash. True, a fairly small percentage of payday loans lenders have a physical office or store, since most of them are already online.
- Credit charges. The Internet provides a great opportunity to automatically pay bills and loans. There should be enough money in your account on the payout day and then the payment will be charged automatically.
- Post-dated checks. Depending on the company the lender may accept post-dated checks, which the lender simply cashes at the bank on the payment day. Of course, in order to avoid problems, high interest and high fines on that day, your account should have no less money than you should pay for a payday loan.
Pros payday loans
The speed of receiving money, ease of processing and minimum requirements for borrowers are great advantages of payday loans over other types of loans. When you have unforeseen urgent expenses, for you these features, coupled with a high percentage of approval will be important. Also, small amounts of payday loans will not allow you to spend more than you can afford and get into excessive debts.
Cons payday loans
There are no perfect financial instruments because each of them has its drawbacks. High annual interest rates make payday loans expensive type of loans. This becomes especially dangerous when the borrower cannot repay the loan on time. The debt then increases with great speed and can absorb your financial capabilities and order to spoil your good time.
To take or not to take payday loans?
Now with our payday loans guide you can understand whether you should take a payday loan by weighing all the pros and cons. When you urgently need money to cover unplanned expenses, this will probably be one of the best options. The main thing is to adequately assess your financial capabilities in order to be able to repay the payday loan on time and not get into the growing debt.
You can find all the information to make a decision in our financial blog. If you have any questions, write to us and our experts will help you make the right decision.
