You must have seen radio, television, newspaper as well as internet flooded with advertisements like ‘Get cash until payday’. These are payday loans, also known as quick or fast loans, through which one can avail instant cash just by applying over the internet. Regardless of the name, payday loans are short-term loans that finance companies and lenders offer at high rate of interest.
HOW PAYDAY LOANS WORK?
If you are in urgent need of instant cash, you must apply for payday loans. But before applying, you must know how do payday loans work?
Visit the lender – Money lending companies have stores across the length and breadth of the country, where you can go and apply. However, if you even don’t have time to visit the store, you can easily apply online.
Fill the application form – the form consists of personal information, contact details, bank account information and job details. The lender may also ask you to provide contact information of your family member so that latter can be contacted if you fail to pay back the loan.
Next, you would have to write a check payable to the money lending firm for the amount that you are borrowing along with the fee that would be charged. If you are applying over the internet, you will have to pledge to pay back the borrowed amount by a certain date.
Following this, the lender gives the amount to the borrower and agrees to hold the check till the due date, which is usually the borrower’s paycheck date.
When the term of loan is up, the lender cashes the check electronically and the borrowed amount along with the fee is debited from your account.
If you choose to extend the loan term, you must know that an additional fee would be added to the loan charge, which is usually high.
Example of payday loans: If you borrow $100 for 15 days, you write a check payable to the lender for $115 (borrowed amount + the fee charged). The lender agrees to hold the check until the loan term gets over. On the due date, either the lender would deposit the check or you can redeem it by making the payment of $115 in cash. However, if you decide to get the loan term extended, the lender would charge you additional $15 for next 2 weeks. At the end of the loan term, you will be entitled to pay $130, which includes the borrowed amount of $100 and fee of $30.
APPLY FOR PAYDAY LOANS ONLINE
Meanwhile, there are certain points that you must be aware of while availing payday loans. They are as follows:
You must be 18 years old or above
The term for payday loans is 2-4 weeks
High rate of interest is charged on the amount of money one borrows
You must have a permanent job and been working in a company for more than six months
You must use the money for genuine purposes like paying pending bills, medical expenses, home renovation expenditure and the like
You can find scores of money lending companies in your vicinity that offer payday loans. But before you finalize the agreement, make sure you go through all terms and conditions thoroughly so that you don’t feel duped in the end. One of the best parts of payday loans is that money gets deposited in your account within a day. Unfortunately, many people often apply for payday loans because they offer easy money. The practice must not be adhered to as even if quick or fast loans are convenient and help in managing finances; such loans often lead to bad financial conditions because of high rate of interest charged on the borrowed sum.
Before you apply for payday loans, you can also consider the following alternatives and then take final decision
Consider short-term loan for small amount from a bank or a credit union. They would offer the credit at low rate of interest.
Check with your bank if it offers over-draft (OD) protection on your account.
Contact your friends or family member if they can lend you some money for a certain time period.
Contact credit counseling service providers of your locality as they can help you to make repayment plan and make a budget.
Find out the terms of credit policy before you apply for loans.
It is always advised to consider the above listed options and compare them before you apply for payday loans, also referred to as cash advance loans, deferred deposit loans, post-dated check loans or check advance loans. But if you are in urgent need of cash, surf the internet and apply for payday loans with a reliable and renowned money lending company.