Payday loans or payday advances are made by lenders to borrowers who have an urgent need for a small amount of cash. Typically, these loans are characterized by:
- Being unsecured
- Short term duration
- Extremely useful in an emergency
- Having high interest rates and
- Typically advanced against the borrower’s payday
These instant cash advances are made to people who can show employment records and the ability to pay back a loan when he gets his paycheck. Payday loan has several advantages associated with it. One of the biggest ones is the fact that it helps the underserved or unserved niche of the population. Banks may not lend money to everybody. But with a payday loan, a person can borrow a small sum of money to help him tide over some emergency or requirement. With the swiftness with which applications for a payday loan are processed, this also helps people who have an urgent need for money. A payday lender promises extremely swift and simple processing of loan applications.
The USA is governed by different laws in different states but generally speaking, this is one industry which is legal and very controlled in 37 of the country’s states and considered illegal in 13 states. A payday loan works with high interest rates usually put down as annual percentage rates. These rates range up to 780 in the USA. So in case you are interested in getting a payday loan, do pay attention to the state and federal laws and especially to the rate of interest that you will be repaying at. This is even more important when you have the need to extend the payback period.
One more advantage of getting a payday loan is the fact that you do not need an excellent credit rating. You will need to have a job though because most of the times, the repayment of the loan is linked to when you will get your next paycheck. Ideally, opt for a payday loan only in dire emergencies and when you simply do not have any option of borrowing money. Also, do try and ensure that you pay it all back when your paycheck comes in. With the ease with which you can get a payday loan, comes the certain knowledge that the interest rate will bog you down if you do not pay back in time.
There are a few documents that you have to produce before or when you apply for a payday loan. Apart from the proof of a job and the date of your next paycheck, you also have to be a US citizen and have a bank account in your own name too. Most online resources and websites of payday lenders offer very simple loan applications or forms which you can fill out and expect to receive the money within the next working day. Some companies also promise extremely fast response time and state that you could even SMS them for a payday loan in front of an ATM machine and a few minutes later, can withdraw the money from the ATM. Do check out all terms and conditions before signing on with a payday loans company.