A payday loan, also known as cash advance is typically a short-term loan that is due on the borrower’s next payday. Generally, they consist of three features, which are the loans come due the next payday, loans are only for small amounts, and you must either write a check for the borrowed amount and interest charges in advance, where the lender can be able to deposit when the loans come due, or provide the lenders with access to your checking or current account.
However, one thing you must know is that other features of this kind of loan can vary. For instance, cash advance are usually structured to be cleared or paid off in just one lump-sum payment, though interest-only payments (rollovers or renewals) are most common. In some cases these loans are structured so that they can be repayable in instalments over certain period of time.
So, How Does Payday Loan Really Work?
These days, a lot of people tend to apply for cash advance online because of thehelp they provide, especially during stop tough times. While most us knows very well the concept of this kind of loans, there are more people who yet don’t understand how the process works. You should know who is eligible for it, how can you apply for it, what is the best interest rate, what is the amount limit you can borrow just to mention a few things.
Payday loans are mostly needed when an individual is in need of immediate cash to sort out some basic needs. So, understanding the working process of obtaining this loan and what you really need money for can provide you with really insight of what you want. Once you understand how it works, the better since you now know what is needed and also risks involved.
Most people seeking for cash advance usually fall to attain the eligibility criteria for a regular bank loan because of either bad credit report or any other factor and here is where payday loans come to play. This means that whether you have a bad credit report or not eligible for any loan application through bank, you can still apply for cash advance and with right documents, you can receive them on the same day. Interestingly, the majority of people applying for these loans have bad credit report and that is the main reason they seek payday loans rather than obtaining other forms of loans directly from banks and other financial institutions.
A payday loan process is usually determined by you or the company that offers them. There are several companies that provide this service. These companies have their websites where you can find a form that you need to fill in your personal details. You also needed to upload your recent pay slip and this means that you can only get this loan if you are employed. Your past pay slips will determine how much you loan can get from them and whether you will be able to pay it off.
In addition to your monthly pay slips, you are also required to provide your bank statement. After providing all these information to them your loan is processes immediately and you may receive your cash within a day.
The Benefits of Payday Loans
Nowadays, this form of loans offered almost everywhere across the world help a lot of people, particularly those seeking some money for short-term needs. As mentioned earlier, most of these people are not eligible for other loan types for one reason or another. Despite of that, here are some advantages of cash advance:
• The application process for this type of loans is very quick, easy and convenient – If you apply today and qualify for certain amount of money, you can then expect to have the same amount reflecting in your bank account within a few hours. In the history of banking, no traditional form of banking can offer their services at that speed when sanctioning a loan. The technology has made this possible since you allowed to apply online just from the comfort of your place.
• Payday loans are basically short-term, so you will not have to deal with your problem for a quite long time. They are just meant to help people overcome their financial problems for a short period of time. This means that even if it is a loan you would not be under debt for more than a month. However, if you fail to repay on time, then you have to deal with some consequences. In fact, lenders understand that there may be some defaulters and that is why they have certain rules and guidelines for the entire process that every borrower must read before applying.
• Availability of high chances of qualifying for a payday loan is also another advantage. Unlike other financial institutions, the lender only factors in the small problems you are facing and provided that you have a pay slip, you will definitely pay off your loan, making the qualification process less complicated.
• The payday loan terms, including the interest rate and other fees charged by the lender are all clearly stated beforehand. You are therefore well informed the exact amount you required or liable to pay back. These loans do not have hidden charges or fees and all companies offering this service are controlled and monitored by a regulated body.
In a nutshell, since payday loans are just a little amount that is meant for sorting out basic needs such as bills, food, and other necessary or emergency needs, you should never apply for it just to buy luxurious goods. Never apply for such loan to buy luxurious goods – it will be disastrous to your life!
Conclusively, now you know what cash advance is, how you can apply and what you can benefit from it, it is important to take some precautions before opting to it. Before applying, try to compare the interest rates and other charges offered by different lenders. You can find full information and details in their websites. You should also consider their terms and conditions since some companies have vague terms that can introduce hidden charges when repaying your loan back.