Last Updated on Mar 13, 2020 by James W
Loans are an important part of the financial lives of both individuals and businesses. They help us tide over tough times, consolidate positions, meet some very urgent needs or even indulge in some personal desires.
There are different types of loans available to individuals today and which will be best for anyone at a giving time will be dependent on a number of factors. In this article, we are going to be focusing on just one type and we are talking about payday loans.
What is a Payday Loan?
This type of loan is given to individuals who need quick cash but cannot wait for their next pay check. They are therefore required to collect the amount they need (which is usually not a huge amount) and repay it on or before the next paycheck.
This is usually an unsecured loan which means that you do not need to have any collateral backing it. You can read about it here.
Main Features of a Payday Loan
There are a number of features that this type of credit facility possesses and we will briefly list a few of them.
Recipient Must Have a Steady Paycheck
Though we mentioned above that it is an unsecured facility, you do require a paycheck to be able to access it. There has to be proof that you are employed and receive a fixed amount on a regular basis. In many cases, the amount you are paid will determine how much you can borrow as you may not be able to legally borrow above a given percentage of your monthly earnings.
Recipient Must Be Legally of Age
A prequalification for accessing this facility is being of legal age which in most cases is about 18 years. The point is that you must be legally old enough to be employed and earn a paycheck.
Loan Amount Cannot Exceed a Given Percentage of Borrower’s Paycheck
The amounts you can collect is usually not more than $1500. This will differ from state to state. The most common amount is about $500.
Loan Term Cannot Exceed 30 Days
Since it is a payday loan, the tenure for repayment ranges from a week to no more than 30 days. If you need to extend your repayment beyond this term, you will attract more cost to yourself.
Lenders Charge High Interest Rates
To access this loan, be ready to pay high interest rates regarded as fees. This is usually a compromise for being able to get the funds very easily and without any rigorous application process.
Requires no Credit Check
Anyone, regardless of how bad their credit is, can get this funding so long as they have a paycheck to show.
You can get other details here: https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/.
Things to Consider when Choosing a Payday Loan
Before rushing in to get this credit facility, take some time to be sure you fully understand what you are getting yourself into. A lot of folks have found themselves locked in a cycle of indebtedness to these lenders simply because of how easy it is to access the funding.
To ensure you do not find yourself in a situation you regret as a result of collecting one of these credit facilities, it is important that you consider some important points before moving on with the applications.
Can You Do without it?
Before taking any kind of credit facility you need to ask yourself if you really cannot do without it. It’s easy to take these funds but repaying them is usually not as easy especially with the required interest. This should be something you turn to only for serious emergencies and as a last resort. It is not a first option, but a last one.
Is the Interest Rate Worth it?
Understand exactly how much interest you will be paying on the loan and be sure that it is worth it. This follows from the point above. When you are repaying with the high interest rate, will you still think it was worth it, and the right thing to have done?
Can You Manage with a Reduced Income on Payday?
Never forget that come payday, what you will take home will be less your repayment for the collected loan. Will what you have left be enough to tide you over to the next pay check? What we have found is that many folks find that they cannot meet their regular expenses with what is left so they go back for more, starting a cycle that can eventually lead to debt. You need to be very smart about the choices you make here.
Is this the Best Offer You Can Get?
If you have decided that you cannot do without taking this facility, you should take some time to ensure you are getting the best offer. There are numerous lenders who offer this type of facility so you can compare a number of them to be sure that you are choosing the one with the best offer.
Do You Know Your State’s Position on this Type of Facility?
Finally, take some time to find out your state’s position on this type of lending. There are states where it is regulated, there are others where it is outlawed and others where they are largely unregulated. Find out what your state’s law has to say about it and be guided by this.
Be sure you know exactly what you are getting into before taking out any payday loan.
A Few Recommendations
The Community Financial Services Association of America estimates that there are almost 19,000 payday lenders across the nation. How does one go about choosing the right one from this lot? We understand how difficult it can be when you are presented with too many options so we will quickly list a few recommendations.
This company has been in business since 2004 and offers payday advances across the country. You can apply online and immediately know if you can be offered a loan. This decision is usually determined by your location since each state has its own regulations on the matter.
This company offers what it refers to as an alternative to payday advances. With this company, you are able to receive up to $5,000 which you can pay over time rather than in a one-off payment. You can apply for this facility online and get your funds very easily.
Check into Cash
This company offers up to $1000 which you can get instantly if you walk in to any of their physical stores or within 24 hours if you apply online. The process is easy and you will get a decision on your application immediately.
You can find other recommendations and reviews from OfficialTop5Review.com.
You do not have to suffer in silence when financial emergency hits you. While we advise that you be carefully how you go about collecting these loans, we also know that at times, they can be helpful and even god sent.
The main thing here is not to abuse these facilities but to use them only when they are absolutely necessary. With good financial management, you will find payday loans to be a great tool.