Like many other financial institutions payday is also a company which offer loans. These are high cost and short term loans that comprises of small amount. It is also called cash advance loan, salary loan or payday advance. This Payday advance is a short unsecured loan which borrowers have to return with their next payday check. These loans are usually given to people who have a bad credit score. If any borrower cannot pay back the loan in time then there are few alternatives which he or she can adopt depending on the situation.
There are two ways by which payday loan can be borrowed. First one is online and the second one is in person by visiting the store. If you visit the store, lender will give you money in 15 minutes or so but if you do it through online it might take one day for the transaction.
In return the lender will ask you for a signed check and a permission to electronically withdraw money from your account. You have to pay the money back with the next payday. If the borrower does not visits the store on the set date or he doesn’t have enough money in his account to repay the loan then the bank, in addition to the loan cost will also add interest fee as a result of the failure of repayment.
How much loan you can take from payday depends on the financial status of your account and the state laws. Most states allow the loan of $300 – $1000 but this doesn’t mean that you can always go for the higher amount.
The lender will first check all the necessary details like your income, current balance, expenses and then lend you money depending how much you can easily payback.
To qualify for payday loan you need to have a bank account, an ID and proper income source and your age must be atleast 18 years.
Even if you qualify these conditions there are still some circumstances that can cancel your eligibility. Let’s take a look at what are those conditions:
The cost of loan in both cases i.e. the store and through online, is different. If you take loan via visiting the store then the cost is $15 for every $100 i.e. 391% APR. But if you take loan via online then the cost is $23.53 for every $100 which is 613% APR.
If you do not pay on the first time then your interest will increase. It will keep on adding until you pay the whole amount. In few months you will have to pay more than you borrowed and that’s why payday loans are risky.
If you do not pay back the loan in the given time then it might cause serious problems for you.
Instead of going for the loan there are other better options which you should look at before taking any such steps because borrowing loans is easy but when it comes to repayment it becomes a nuisance. Let’s take a look the possibilities we have
There are few alternatives available of pay day loan but even they are not much advised. One of them is long term pay day investment loan studies have shown that people who first took payday later opt this one to repay their first payday loan.
For this loan the repayment time span is three years. You can do this via online or by visiting the store. Another alternative is auto title loan, in this the lender uses equity of the car as credit and if you do not pay the amount in time then the lender might seize your car.
Staff Write July 29th, 2018
Posted In: Payday