Low Cost Payday Loans

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Bryant Oden

What is a Payday Loan?

Most of us have seen and heard the terms “Payday Loan” and “Cash Advance Loan” many times. Most large cities have dozens of quick cash stores where you can instantly get a cash advance payday loan, and the online competition from payday loan lenders is fierce. But what exactly is a payday loan?

A Payday loan or cash advance loan, sometimes called an unsecured personal loan, is a loan of $300, $500, $1000 and sometimes $1500 or even $2000, given to someone who can demonstrate regular income. It is usually for emergencies or tight personal finance situations, in which the borrower is unable to make ends meet and can’t find a loan from other sources. Most payday loan companies simply charge a flat rate, often around $10- $15 for every $100 borrowed. If the loan is not paid back in full by the due date, hefty late fees and interest fees are usually added. How Do Payday Loans Work?

In a cash advance local store, the clerk generally verifies the information immediately, via computer, and is able to give you the cash within minutes. With online cash advance payday loan companies, they have you fill out an online application. Sometimes faxing is required to show proof of regular income, driver’s license, etc. A growing number of payday loan online companies require no faxing. Most payday loan companies have no credit check, because it is assumed if the borrower had good credit, they would be able to get a less costly loan from their bank, credit card company or other sources. Some companies have instant approval, others take up to a few hours for verification. Some offer instant transfer into the borrower’s bank account, and others require about 24 hours. The borrower is expected to pay back the loan in full within two-four weeks. Sometimes this occurs automatically the day after their paycheck is deposited into their account, through direct withdrawal. Other times, the borrower must make the payment manually.

Why are some people and organizations critical of payday loans? Critics of payday loan lenders claim that payday loans are targeted to lower income, minority and military families who are having difficulty getting by. When compared with other types of loans, unsecured bad credit cash advance payday loans have a very high APR. For example, a $1000 loan at $15 per hundred dollars borrowed would cost $150. This would be 15% interest if the loan were one year (15% APR). However, if the loan is expected to be fully repaid within a month, the payday loan fees translate to over 150% APR. Many groups and state and federal government organizations are concerned that this takes advantage of those who already have the most financial difficulty. In their defense, payday loan companies argue that they provide a very different service than typical loans and that it is unfair to view them with the same measures. Cash advance pay check companies offer people in desperate need of money to pay bills, handle emergency medical costs, and so forth, a way to get funds when no one else will provide them. The fees are not interest rates, but more like convenience fees, for being able to get a considerable amount of money very quickly, even with a bad credit history.

Several states have recently enacted payday loan laws which seek to protect low income borrowers from getting trapped in a cycle which is all too common: needing to take out payday loans continuously, to pay off the previous payday loans and make ends meet for the current month. Continued use of payday loans can lead to a disastrous downward spiral in which a large percentage of every paycheck is going towards payday loan fees, past and present.

In short, payday loans can be a viable short term solution- when used very sparingly, with a definite plan to repay the loan in full on time. They can also be a sugar-coated poison, that slowly (or quickly) pulls the borrower into a mess much more difficult to dig out of than their original situation. If you are considering getting a payday loan, first make sure there are not other sources, even friends or relatives, which could let you take out a loan and pay it back over a longer stretch of time. Second, make absolutely certain you will be able to repay the loan on time, to avoid significant late fees. And third, actively engage in budgeting and realistic financial planning, so that you can work towards a time, hopefully in a matter of a few months, in which you won’t need to take out such a costly loan in order to take care of all monthly financial obligations.

http://www.smartmoneydaily.com/payday-loan/ , a section of Smartmoneydaily, is a resource for those who are thinking about taking out payday loans, to help them make informed, intelligent decisions about their personal finance options.

A Quick Note From The Publisher... If you like the article above, you may be interested in the following article which is also related to Payday Loans... Payday Loans: No Credit Check No Fuss Loans Payday Loans: No Credit Check No Fuss Loans Payday advance loans are the fastest and most convenient option for getting a cash advance for emergencies before your next payday. However getting payday loans and their repayments involve certain important aspects. Herein we are attempting to answer all your general queries related to Payday loans and we hope it will serve as a tool to open up any mystery surrounding payday loans or cash advance. What Is A Payday Loan Or Cash Advance Loan? We daily come across many loan types like housing loan, personal loan, and education loan. However, the payday loans are a new buzz in the market, and it is very popular. This loan is known by many names like "Cash Advance", "Paycheck loan", "Check loans", and "Payday advance loans". Let us understand what is a payday loan or cash advance loan and how and when it should be used for your maximum advantage. Payday loans are unsecured loans, which can be used for meeting your emergency financial needs and is paid back out of your next paycheck on your payday. Thus, payday loans are the shortest tenure loans among the other loans available in the market. Are there any limitations on payday loan or cash advance loan usage? Many a times we face a situation when we need money badly but feel like our hands are tied as our payday is still several days away. In such a scenario, we either have to shelve or defer our plan of purchasing something or go for a heavy interest credit card loan to meet the obligation. The requirement could be to pay up unexpected medical bills, your kid's school fee, to avoid bouncing of your issued checks or any other financial obligation. In such trying times, payday loans or a cash...