Amidst all the financial turmoil all around the globe, the payday loan industry has marketed itself promising to give a solution to people who are in need of some extra cash. Payday lenders have experienced a warm welcome to the lifestyle of a lot of American families. Who would not? The payday loan scheme offers people the chance to borrow money without the hassle. Even people with bad credit do not have to worry. Getting a payday loan does not require any credit check to be done. All it asks is for you to be at least 18 years of age, with a stable job or source of financial income and an active checking account.
However, as simple and easy as this process seems to be, there is quite a “catch” you should know. Borrowers contact their chosen payday lender to obtain a small cash loan, with payment payable in full at the borrower’s next paycheck (typically a two week term). These lenders impose finance charges that usually range from 15 to 30 percent of the amount for the two-week duration. If you convert this into annual percentage rate (APR) standing, rates can range from 390 to 780 percent. The borrower then writes a postdated check to the lender carrying the full amount borrowed plus the agreed loan fees. When the maturity date (agreed repay date) comes, the borrower can go back to the lender in person to repay. For convenience, the borrower can opt for to have the lender process it traditionally or do electronic withdrawal from his checking account.
Now, because of the high interest rates, some people might find it hard to repay on their next payday. If the borrower’s account does not have the sufficient funds to cover the check, he can acquire a bounced check fee from his bank in addition to the costs of the loan. The lender might give you more time to repay, however the loan may bring upon additional fees and/or an increased interest rate as a result of the failure to pay on time.
Getting a payday loan is very helpful at times. It is fast, easy and simple. However, you must assess your capability to pay before borrowing the amount. In the first place, you are getting a loan to have a quick fix on your financial problems and not to add to it. You should also have a clear understanding on what you signed up for. Information and awareness is always the key.
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