Consumers who have ever had difficulty with making ends meet will know exactly what a payday loan is and how to go about getting one. For those who are unfamiliar with it, this is a guide to assist them in deciding whether to go about securing such a loan.
A payday loan is not meant for people who require a large sum of money to buy a home or vehicle. On the contrary, a payday loan is intended to be used by those who need a smaller amount of immediate cash to pay for an unplanned expense, such as to repair a vehicle or to catch up on debts before they become out of hand. Lenders typically offer payday loans in the range of 80-750 pounds.
As such, there are particular traits that payday loans have in common.
• They have a short period of repayment: Most payday loans are made good within two weeks to a month, and can only be extended by paying the appropriate extension fee.
• Interest rates are charged as a flat fee instead of a percentage. This fee is usually 25 pounds for every 100 pounds loaned.
• The application process for such a loan is simple and free, yet thorough, and money is often available same day or within forty-eight hours.
Applying
While applying for a payday loan is easier than that of a long-term loan, the process is not without its complications. Applicants are often spared the dreaded credit check, but must wait around for the results of extensive reference checks, bank account balance information and employment verification. This can be an embarrassing and seemingly unnecessary bit of invasive research, but it must be understood that payday loans are often made available to the entire spectrum of society, including people who have it in their interest to take advantage of the system. This digging is actually an attempt to thwart the immoral acts of a few people.
The process
If you are deemed eligible for a loan, you will be expected to write a check to the lender for the amount borrowed plus the flat fee. You will post-date the check to be cashed anywhere from two weeks to thirty days after receiving the money, and you will sign a loan agreement as you would with any other loan. What makes the difference is the fact that there are no formal applications to fill out, and your credit will not be checked.
When paid within the stipulated period, the payday loan is appealing to a generation consumed with fast cash for fast products. It is incorrect to assume that there is no bad side, however.
Many consumers who already have problems budgeting their finances are left with the ordeal of having to get another advance loan to pay what they should have paid to begin with, simply because they didn't anticipate the effect that a postponed payment would have on their finances. However, the majority of those who apply for the payday loan are better off because they used the loan for what it was supposed to be used for, a temporary fix to an immediate financial situation.
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