In the current economic climate, alternatives to earning income to sustain livelihoods are becoming more and more necessary. Other options include borrowing money from friends/relatives; cash paid by employers; pawn personal belongings and payday loans. Payday loans, also known as check/cash advance loans or deferred deposit check loans, are among the most popular. With the popularity of payday loans, more and more people want to know what payday loans are, and whether this is right for them.
So what is a payday loan?
Payday loans are unsecured short-term loans ranging from a few hundred dollars to $1,500. The borrower typically mortgages a specific amount of money by adding a specific amount to the personal cheque for the next payment period to credit a particular amount to his account. Payday loans are designed to help you with quick cash payments for unexpected bills or emergencies until your cash is used up or available.
Payday loans are not revolving credit lines. This is short-term and this is a key factor in such loans. The idea is to lend a loan to make up for small obstacles on the road or to eliminate any financial difficulties until your next payday. If you think that a payday loan can solve a bigger financial problem, it is recommended to stop! Payday loans can be a bigger problem when used in troubled cash flow situations.
So what is a payday loan?
The most important thing to remember about payday loans is that you must repay the loan in time to avoid paying crazy fees that may equal or exceed the amount of the loan itself! It is the renewal of borrowing and the failure to repay on time that it can cause significant financial difficulties for borrowers.
Most loans have a repayment period of four to eighteen days, depending on the terms negotiated with the lender. The repayment schedule and repayment method are arranged at the time of loan issuance. The borrower will usually agree to repay the loan in full in cash on or before the due date. In addition, some lenders may choose to collect the debit by depositing the debit's expired cheque into their bank account on the date agreed by both parties.
For payday loans, each paid loan will have a fixed interest rate charged to the repayment amount. For every $100.00 borrowed, the average interest rate is $15.00 to $20.00. Due to the nature of the fast turnaround time of payday loans, the annual interest rate [APR] is usually very high. In some cases [APR] it is usually 100%, 200% or even up to 400%.
If the borrower is unable to repay the loan at the scheduled time, the lending institution can agree to extend the loan to allow more time to repay the loan. The downside of deferred loans is that you add extra fees to your account. For example, if the cost of borrowing $100.00 is $15.00 and the borrower will extend the loan three times, the new fee is $60.00. That is the original $15.00 fee plus three times the cost itself, added to each borrowed $100.00.
What are the requirements for payday loans?
Usually, the only major requirement for a payday loan is that you have a job. Your job is to make sure you can repay the loan. You are expected to receive a paycheck, so this money can be used to repay the loan. To approve a payday loan, there is no need or even a good reputation. Lending institutions only want to see that you are employed and have a stable income. Essentially, your job is your mortgage
Getting a payday loan is actually a simple process. You have applied for and signed a written document stating that you agree to repay the loan on the terms of the lender. Be sure to take the time to read the loan terms carefully and don't be afraid to ask what the terms mean. Usually, such contracts are written in legal financial terms that are not easily understood by the average consumer.
Beware of the borrower!
If you feel that the credit representative cannot fully answer your question, please say this! If you are unclear about the terms of the loan, please proceed with the loan before you fully understand the terms of the loan. The teacher always said that the only stupid question is the question you don't ask. This is real! Similarly, if you do not understand all the terms of the loan, please do not sign the document until you fully explain the terms. Otherwise, you are bound by the laws of these terms, and if you fail to act in accordance with the terms of the loan, these terms may have disastrous consequences for you. We want to think that everyone is above everything else, but not all lenders can. Unfortunately, there are unscrupulous lenders who plan to make a profit at your expense.
The National Association for the Advancement of Colored People and the Ministry of National Defense have noted that the Payday Loan Office has strategically opened operations near military bases and in areas where the populous African American and Hispanic populations have been socially deprived. At the office. Many well-known financial institutions, consumer groups and civil society organizations are doing their best to close payday loan offices, but so far their efforts have largely failed.
If you need it, please borrow it, but be smarter!
In the case of reputable lenders often using strict guidelines, many people fall into the payroll loan cycle due to direct benefits. When an emergency occurs and cash is needed, the payday loan company will provide fast, worry-free cash. In most cases, there are no minimum credit requirements in most cases and no background checks are performed. In most cases, all that is required to get a payday loan is the most recent pay slip and proof of checking account. In these respects, payday loans and cash advances do provide financial options for consumers in emergencies. On the other hand, more and more people are caught in the vicious circle of borrowing, which can lead to financial collapse. This is not good, especially considering that loans may initially be taken to avoid financial disasters. With such pros and cons, it seems that the best advice is to borrow money when absolutely necessary, but be extra careful.
Being proactive may be the best strategy, or according to traditional wisdom, “prevention is better than cure”. Be honest about your family's financial situation and propose innovative ways to borrow without lending. Consider reducing the burden on your budget, making sure you save a little money from each salary and reducing your credit card and working capital.
With a little effort, you can make a huge difference in your financial situation and quality of life. However, if you must get a payday loan, keep in mind the following points:
– Payday loans are not revolving credit lines
– Pay back on time!
– Do not plan to postpone the loan. Instead, plan to repay
– The only "stupid" question is the question you don't ask
– The payday loan has terms and conditions for repayment. Know and follow them
– If you are not careful, a payday loan can damage your finances and endanger your work.
-Prevention is better than cure