What is a payday loan? Chances are you may have stumbled upon websites offering payday loans or heard your friends talking about it, and may be tempted to apply for one. However, there are countless financial sources offering payday loans. But before you select one, it would be wise to understand what a payday loan really is.
For the uninitiated, a payday loan is defined as a short term loan that, like its name implies, is meant to tide you over until the next payday. A payday loan is also known as a paycheck advance or even a cash advance loan, but the latter may be confused with a credit card cash advance loan so it is best to just refer the loan to its original name – a payday loan. A payday loan gets you through to the next payday and helps you survive without borrowing money elsewhere.
Payday loans can be applied easily but they need to be secured against your next pay. This means that you must keep aside some funds from the upcoming paycheck in order to repay your payday loan. This must be done as soon as possible, ideally between 14 to 21 days upon approval of your payday loan and disbursement of your payday loan funds.
Payday loan process
Applying for a payday loan is generally very easy and effortless on your end. There are many financial entities who are more than happy to offer you vast solutions of payday loans. However, there are certain conditions that must be met before your payday loan application may be approved. If you are in the United States, the conditions include:
Must be 18 years and above at the time of loan application To have a legal source of income Prove that you have a steady flow of income with minimum amount of $1000 Should have a checking account to your name prior to applying for a payday loan Must bring along pay stubs and recent bank statements which are valid Once you know this criterion can be fulfilled, it’s time to go shopping for a payday loan provider. A good place to begin seeking advice would be at your bank, or at a reputable online financial portal. Word of mouth is also useful when considering places to obtain your payday loan.
How it works – Retail lending
Once you have decided the perfect place where you would apply for your payday loan, you can visit the retail lending store with your necessary details and documents. In order to obtain your payday loan, you will need to produce a postdated check detailing your loan amount along with an additional fee included. Once you received your payday check, you wiill have the option of returning the amount you borrowed from your lender in person or have the lender cash in the check. Only after this is done, your payday loan would be repaid in full.
On the other hand, if you were not able to repay your payday loan due to insufficient funds, you will need to pay the bounced check fee to your bank along with an additional percentage of interest rate to your lender. Therefore, it would be better to settle your payday loan payment within the stipulated time to avoid the extra burden on your pocket.
How it works – Internet lending
Just like you are able to walk into a brick and mortar retail lender, you will also have the option of applying for a payday loan online. The Internet opens doors to many financial opportunities. So finding a payday loan provider that fulfills your needs will not be difficult. Getting a payday loan online can be even easier compared to obtaining it from a retail lender. All you need to do is fill in an online application form or fax over an application form that has been completed, along with copies of your pay stubs, bank statements other important paperwork.
Payday loan benefits
There are many benefits of a payday loan. For once you are able to stave off hunger and possibly starvation if you are able to secure a payday loan for yourself. You don’t need to think about borrowing elsewhere and embarrassing yourself in the process.
By securing a payday loan, you will be able to pay off what you borrowed using your paycheck in a matter of weeks. Thus saving you the trouble of seeking enough funds just to get you by.