Payday loans are high-interest loans. They are short-term and also known as cash advances. It is based on the borrower’s check for future deposit or electronic access to the borrower’s bank account. These loans are designed as quick and easy to qualify for. They are intended for the consumers to get help in fast cash to hold until their next paycheck. Therefore it is named payday loans. They are also known by many other names like check advance loans, post-dated check loans, deferred loans, and cash advance loans. Whereas same day payday loans bad credit direct lender are also a part of it.
What are the standard features of a payday loan?
These payday loans are the usual small amount, and most states limit the number of payday loans. It is usually repaid in a single payment on the borrower’s next payday. Like when another source of income is received. Such as the pension or social security. The due date is typically two or four weeks from when the loan was made. It is usually set on the agreement. In the situation when one is repaying the loan, one will write a post-dated check for the total balance. It includes fees.
The lender may cash the check if one is not repaying the loan before the due date. A payday lender does not consider the ability to repay the loan while meeting the other financial obligation. The payday loan proceeds will be available in cash or check. Then it will be electronically deposited into the account or loaded on a prepaid debit card.
Sometimes payday loans are structured and repayable in instalments over a long period.
What are the requirements for anyone who is receiving a payday loan?
The person who has a payday loan must fulfil all the requirements that the government’s consumer financial protection bureau obligated. In addition, the borrowers must be at least 18 years old and have an open and active bank account in relatively good standing, with identification and a good source of income with proof and valid identification.
What are the processing time and procedure of a payday loan?
The loan is usually approved within 15 minutes. In most circumstances, the borrowers write the check for the loan amount and a lending fee, and then the lender holds onto the bill until the predetermined due date. Most payday loans are extended for just a few weeks. Then, when the loans come due, the borrower either pays off the loan or allows the lender to cash the post-dated check. Otherwise, he will make a withdrawal from the borrower’s account.
What are the risks involved in payday loans?
Usually, the borrowers become financially troubled when they cannot pay them off as they are due. The loan payment gets extended as more fees are tacked on. According to the CFPB, payday lenders charge about $10 to $30 as a fee for every borrowing of $100. And then the %15 fee works out to about 400% annually. Payday loans are standard and about 12 million American use payday loans each year. They are accessible to consumers with poor credit and do not usually require a credit check.
How do payday loans are made?
Payday loan stores typically make payday loans. Or, it depends upon the state licensing requirements, which are from stores that sell other financial services like check cashing, rent-to-own and pawn, title loans, etc. Of course, the loans are made through websites and mobile devices too.