What You Should Know About Payday Loans

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Good Thursday morning everyone! Today’s guest post comes to us from Rita. In her article, she gives us some crucial information about payday loans, a topic of which I do not know that much about. Enjoy!

What You Should Know About Payday Loans 
They have been around for a few years now, but payday loans are still considered a minority form of lending, perhaps because of the lack of information about what these loans exactly entail.
In essence, payday loans are designed to fill the gap between pay days for those who find themselves short of money at any point.  They are intended as a short term borrowing solution being repayable between 14 and 31 days, although some lenders will lend for 100 days.  Loan amounts are small compared to traditional loans with most lenders offering loans from $100 to $1500, with some offering more in certain circumstances.  Applying is easy with the majority of lenders having websites and online application forms.  You can also apply for loans in person at various offices and outlets in your area.
Payday loans have come in for much criticism because of the high rates of interest applied.  Interest rates are typically around 2500% APR which many fear can lead borrowers into serious debt.  It is worth noting that this is the annual rate of interest which would be applied if you borrowed for a full 12 months.  Because payday loans are lent over a short time period the actual cost to you will only be a few dollars.  Do check out loan repayment calculators to find out exactly how much a loan will cost you.
Repaying your loan can mean sending a post dated check to the lender, setting up a standing order or authorizing the lender to debit your bank account on a certain date.  They are called payday loans because they are intended to be paid back when your next pay check clears.  As a borrower you need to be sure that having paid the loan back you will still have enough to meet your financial needs until the next payday.  These loans are not intended for long term borrowing needs and if you cannot afford to repay the loan on the agreed date then you should talk to the lender about extending the terms.
There has been much written about payday loan lenders freely lending to anyone who applies.  Whilst there maybe lenders who do this, most will have some criteria which applicants must fulfil before a loan will be approved.  Typically you should be over 18 years of age, in receipt of a regular pay check and a U.S resident with a valid bank account.  Some lenders may conduct a credit check but most do not meaning that even if you have a bad credit score you can still be approved.  Once you loan has been approved it can be transferred to your bank account within 24 hours to 2 working days.

Thanks for reading – Rita

How about you all? What’s your take on payday loans? Have you ever tried using them?

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