What Are Payday Loans

Are you in need of cash yet, your payday is still a week away? Payday loans may be just what you need.

Payday loans are short term loans that are mostly due on the loaner’s next payday. Payday loans are also called payroll advances, cash advances, paycheck advances, and deferred deposit loans. This type of loan usually have a higher interest and as the name suggests borrowers have to write a personal check for the amount borrowed and the interest. Other types of payday loans will have the borrowers sign over electronic access to their bank accounts in able to receive and repay the loan.

There are several shops and lending companies that offer payday loans. You can also find websites that provide payday loans online. Websites that offer payday loans can be risky but it saves you the time and effort of traveling to the shop and falling in line.

 

Why You Would Need One

There are a lot of reasons why borrowers tend to go for payday loans. One common reason is an emergency expense that would leave borrowers short of their current cash. Some people tend to get sick before their payday and need the money to purchase medicines and even to pay hospital bills. Other reasons could also be due to the unexpected expenses such as traveling and shopping. Payday loans are intended to cover the expenses of the borrower until his next payday. Whatever is the reason of the borrower, payday loans are offered to bridge the gap between paydays.

This type of loan is very easy to get since you would just need to sign a personal check and you need to pay the borrowed amount including the interest in lump sum.

 

What are the requirements to get one

Payday loans are easier to acquire than the regular type of loans. The basic requirements of payday loans include a stable job and proof of income that could include but is not limited to payslip, pay stubs and bank statements. Minimum salary per month exclusive of taxes would depend on the lending company or shop. The borrower should also be at least 18 years old. Communication is also a must, the  lender must be able to contact the borrower before his due date.

 

How is it usually paid back

Payday loans are usually paid back in person. The borrower brings the full amount of the loan and the interest on his payday and reclaim his post dated personal check. If the borrower cannot go to the lending company in person, the shop can just use the check given by the borrower. If this is the case, the borrower must make sure that his checking account has enough funds to cover his payday loan to avoid bounced checks. The borrower can also avoid additional fees by the bank and the lending company.

If the borrower opted for online payday loans, he usually pays by giving the electronic access to his bank account. The lending company can just deduct his payday loan and the interest on the borrower’s account.

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