Five Things You Need to Know about Payday Loans
Payday loans are a common option for those in need of quick and easy cash. Businesses offering this service can be found throughout the country and many Americans apply for them on a regular basis. For those interested in payday loans, there are five facts listed below which are considered essential to a good understanding of what they are and how they work.
1. There is No Credit Check
Your credit score does not matter when it comes to these loans. If they did, they would be almost exactly like ban loans. However, payday loans are not secured by credit but by your employment.
2. You Must Have Proper Employment
The money you borrow will be secured through the amount of money you make at work. This means that your salary or wages must be high enough to cover the loan amount plus fees. Also, the employment you have must be regular and consistent. This means occasional and sporadic employment does not count. Some places will actually require that you have the job for a minimum amount of time before the money will be lent.
3. You Must Have a Bank Account
Your bank account is how the lender will get paid. When the loan becomes due, he will post the charge to your account. This is done through a postdated check written by the borrower. Many places also take debit cards, especially if they only do business online. If there are insufficient funds to cover the amount, you will receive an overdraft.
4. Lenders Will Work With You
Lenders are not spiteful and do not want you to get an overdraft. Those borrowers who feel they will not be able to make the payment are encouraged to speak with the lender. Lenders are open to repayment plans and are more than willing to work with a borrower trying to return money lent.
5. Payday Loans are for the Short Term
The terms and costs of payday loans makes it a worthwhile service only in the short term. Long term involvement in them ends up being very expensive due to the fees for borrowing. Typically, fees will range from 15-35 dollars per 100 dollars borrowed. The time period for normally allotted for repayment is 14 days.
There are other important facts about payday loans, however, the above are the most essential. Together, they pain a picture of these financial products that shows them to be easy and quick but only beneficial in the short run.