What Payday Loan Is, Who Need Payday Loan & How it Works.

Sunday, July 29, 2012
Payday Loan is

- Unsecured Loan : loan without any guarantee from the borrower

- Short Term Loan : 7-30 days – usually 14 days or until the next payday of the borrower

- Small Cash Advance : usually $500 - $ 1000 but some payday lending may offer up to $1500 that borrowers agree to repay out of their next paycheck or regular earnings.

Lately payday loan is also popular known as cash advance or personal loan. With payday loan you can get instant money within 24 hours. Therefore, this loan is very suitable for emergency need.

Since payday loan have such a short period of time to maturity, the charge of borrowing, indicated as an annual percentage rate (APR), is quite high. Usually fees charged on payday loans comprise from $15 to $25 on every $100 for 2 weeks payday advance. That may be equal to APR about 390-650%. That’s why this loan is not suitable for covering your monthly expenses. If you take payday loan just to pay your monthly bills, all you have to do is asking for dispensation and manage your monthly budget.

The payday loans concept is that you get a payday earlier to receiving your pay check and when you have received it you are expected to repay your loan. The procedure is very simple to apply a payday loan. Just complete the application form about your personal identification, personal checking account and job descriptions and wait for the payday lender approval. Once approved, the borrower gives a postdated personal check to the payday loan lender or a authorization to withdraw some amount of money from the borrower’s account and in return, the borrower will receive cash after deducted by the loan fee. So for $100 payday loan with $15 fee, the borrower may write a postdated check for $ 115 and receive $100 only by cash. Before you write a check be sure to read all the terms and conditions and do not hesitate to ask to the customer service about the points you don’t understand.

At the due date of the loan, the borrower should pay back the loan. You can exchange the original check and pay back to the payday loan lender or let the lender deposit your check. If you can’t pay back the money at the specified date, inform your payday loan lender and ask for renewing or rolling over the loan. If you don’t inform your payday loan lender and your deposit account have insufficient funds you’ll be charged for NSF (Non Sufficient Fee) charge on this account.

How long do i have to pay back the loan?

Your loan is normally due on your next pay date. However, most lenders will allow you to extend your loan by paying a fee. Once matched with a lender, you will be directed to your lenders loan documents. Here you will find specific instructions as to what happens when your loan is due.

You typically have the following options: Do nothing and your loan will auto-finance Pay off the loan in full Renew the loan and pay interest and fees only Renew the loan and pay interest and part of the principal Please contact your lender directly if you have repayment questions.

By: → James Decaro