Payday Loans

Alternative ways of obtaining money to make ends meet are becoming increasingly important in the current economic climate. Borrowing money from friends or family, cash advances from employers, pawning personal belongings, and payday loans are all possibilities. The payday loan, also known as a check/cash advance loan or a deferred deposit check loan, is the most famous of these. As payday loans have risen in popularity, more people are curious about what they are and whether they are the best option for their situation. more info here

A payday loan is an unsecured, short-term loan that can range from a few hundred dollars to as much as $1500 in some cases. A borrower usually secures a loan by post-dating a personal check for a certain sum of money that will be deposited into their account the following pay day. Payday loans are intended to assist you in circumstances where you need immediate cash to cover an unforeseen bill or an emergency situation before your funds arrive.

A payday loan is not the same as a revolving credit line. It is a short-term loan, which is a significant consideration in this form of loan. The aim is to use the loan to cover a minor setback or to smooth out any rough financial edges before the next paycheck. If you’re thinking of taking out a payday loan to fix a much bigger financial problem, STOP! When a payday loan is used as part of a broader cash flow problem, it may lead to bigger problems down the road.

The most important thing to note about payday loans is that they must be paid back on time to avoid paying exorbitant fees that may match or exceed the loan’s original value! The renewing of the loan and failure to repay it on time will place the borrower in a severe financial bind.
The repayment period for most loans varies from four to eighteen days, depending on the terms agreed with the lender. At the time the loan is disbursed, the repayment plan and method are defined. The creditor would almost always agree to pay the loan in full in cash on or before the due date. Some lenders may also choose to collect on a loan by depositing the borrower’s post-dated check into his or her bank account on a mutually agreed-upon date.

Each loan disbursed comes with a fixed rate fee that is factored into the repayment. The average interest rate is $15.00 to $20.00 per $100.00 borrowed. The annual percentage rate (APR) on payday loans is typically very high due to the fast turn-around period. It is not unusual for the (APR) to be 100%, 200 percent, or even 400 percent in some instances.
If a borrower is unable to repay a loan on time, the lending institution can agree to a rollover, giving the borrower more time to repay the loan. Rolling a loan over has the disadvantage of adding extra fees to your account. The new charge will be $60.00 if the fee to borrow $100.00 was $15.00 and the borrower rolled over the loan three times. That’s the original $15.00 charge plus three times the fee multiplied by the amount lent ($100.00).