The Basics of Payday Loans

There comes a time in nearly everyone’s life with we come up short, money-wise, and need some help. When you can’t borrow from a friend or get a paycheque advance at work, some people turn to the payday loans online direct lender only are offering. Also known as a cash advance loan, these types of borrowing options can be great for getting you out of a financial bind in the short term, but it’s important to understand all of the ins and outs of these types of loans before you sign on the digital dotted line.

What exactly is a payday loan?

Basically, a payday loan is a short term loan that is secured by providing a post-dated cheque for a specific amount, to be posted against their account when their next payday comes around. They are designed to provide a stop-gap until you get paid again, which can be very useful in covering an emergency (such as a car repair) or an unexpected bill.

What isn’t a payday loan?

Payday loans should not be used as a revolving line of credit. They should not be used repeatedly, or as a way to repair a bigger financial problem. If you are using a payday loan to cover your bills regularly, that is a symptom of a larger problem that should be addressed. Otherwise, you could end up in a much bigger financial hole than you were in the first place.

How are payday loans repaid?

Payday loans are designed to be very short-term loans. Because of that, they are generally due within about 4 to 14 days. In most cases, the loan will be due in full on that date, along with any associated fees.

What fees are levied on a payday loan?

Direct lender payday loans guaranteed approval includes a fixed-rate fee calculated into the amount to be repaid. These fees vary by lender, but they are generally around 15-20 percent of the amount you borrow, or $15 to $20 per $100 borrowed. Because of the quick repayment term, the annual percentage rate is usually very high on these loans, sometimes up to as much a 400 percent.

What happens if I can’t pay it back?

If you are unable to repay your payday loan on the scheduled date, your lender may agree to give you more time. The cost of doing this, however, is that additional fees will be added to your account.

How do I qualify for a payday loan?

In most cases, the only major requirement to secure a payday loan is that you have a job. This is because you will be required to prove that you can – and will – pay back your loan on a certain day. The expectation is that you will be receiving a paycheque and will therefore have the funds to repay your loan. Other than that, the process of getting a payday loan is actually very straightforward. You simply apply (sometimes online), provide proof of employment, wait for approval and sign the paperwork. From there, the money is deposited directly into your account, usually within 24 hours or less, sometimes within just an hour or two.

Author: Richard Casteel

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Richard is the chief author of this blog. He worked as a financial advisor in money market form last 10 yrs. His financial sense in Share trading and any other trading is just outstanding. He just shares his knowledge and experience through this blog. You can contact him directly though CFD-Providers.com.

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