Payday Loans: A Better Way To Emerge From Tough Times?
If you have ever searched for getting quick cash, you may have come across the term payday loans. To this date, these loans have given millions of people to gain some cash that they desperately wanted. In the United States, this payday lending industry accounts for $80 billion a year of business. The basic nature of these payday loans online same day deposit is to help people who are in need of a small amount of money and who are willing to pay very high-interest rates. The following article will give you more information about payday loans.
What are payday loans?
Payday loans are typically short-term, small amount loans that people take to meet their credit obligations. Because these are taken for a short amount of money, so instead of taking loans from banks or other lenders at fixed rates and terms, borrowers take this loan from other sources such as payday loan stores.
The reason why these loans are called payday loans is that borrowers promise to pay the loan amount when they get the next paycheck. Borrowers repay the entire principal amount of the loans along with finance charges if there are any.
Usually, people take this loan to pay for necessary items, like groceries and utilities. They decide to go with this option because they don’t get this short-term and small amount of loan from other conventional sources.
Applying for payday loans
Today, borrowers can apply for payday loans by electronic means. They get the loan for a period of a few weeks. This can also go up for a few months depending on the lenders. For repayment, borrowers can write a check to the lender with the total amount of the loan and lenders’ fees. Some lenders also give the option of payment with installments for a longer term.
Typically, borrowers get payday loans at very high interest rates. Their interest rates range from 300% to 1000%. Lenders justify this high rate of interest by saying that this is a type of credit insurance. Whereas borrowers agree with this rate because they get instant money easily to pay for basic necessities such as rent, car repair or other unforeseen needs.
Important points about payday loans
Here are some points that borrowers should be aware of about the payday loans:
- The application process for payday loans is simpler as compared to other loans.
- The approval process for payday loans also takes less time.
- There is no paperwork required for payday loans.
- Some lenders don’t even check borrowers’ credit scores before sanctioning their loans.
- Borrowers usually repay the loan amount when they get the next paycheck.
- The interest rate for $100 borrowings ranges from $10 to $30. Borrowers also pay $15 to $20 as fees per $100 borrowed.
- The payday loans industry mainly comprises under-regulated companies operating across state lines. In this way, they get access to provide loans to millions of consumers who don’t have many choices to arrange money quickly.
Although payday loans are only available at very high interest rates, they do prove very beneficial to borrowers when they are in a need of quick money. These loans give borrowers the opportunity to pay for their expenses as well as lenders to make a good profit in a short time.