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Payday loan: A complete overview (Page 1 of 2)
From different surveys, it is seen that the number of customers taking payday loan as well as payday lending companies are increasing frequently. If you are a person taking the payday loan for the first time or want to gather information regarding payday loan, then this article will be of great help to you.
Definition of payday loan:-
Payday loan is a very short term loan. Usually the term is 1-2 weeks. There are other names of payday loan like – Cash Advance, Paycheck loan, Check loans, and Payroll advance loans. After you get your paycheck, the loan is to be repaid. If you can not repay the loan amount plus lenders charges for payday loan on your payday, you can rollover the loan amount by paying extra fees to the lender plus you have to pay the interest along with for the rollover period. So, payday loan can be termed a Loan Sharking. Necessity of payday loan:-
By the end of the month, you may face some problems in maintaining some urgent family expenses like paying off your Medical Bills, Phone Bills, and Electric Bills, House Rent or some other utility bills. These things usually happen when you fail to maintain a proper budget at the time of getting your paychecks or not keeping your expenses up to your income limit. Hence in order to meet such urgent expenses you need a payday loan.
Payday loan companies:-
There are so many companies who are promoting check cashing facilities online. Besides some banks and other financial institutions also provides you with a payday loan. You can apply online for a payday loan or you can visit physically to an institution to avail a payday loan.
Conditions to be satisfied to get an instant payday loan:-
The criterions of different payday loan companies are- 1. You must have a job or there should be a regular source of income. 2. You should have a Checking A/c in a bank. 3. You should be an US citizen. 4. You should be at least 18 years of age. 5. Your monthly income should be at least $1000 Per Month. For more, please visit
Comparing Payday Loans To Personal Loans
Payday loans have, in many people’s eyes, a reputation as being an expensive form of credit. It’s certainly true that the imposition of a flat fee of 10% to 25% of the loan amount works out to be a very high APR when you take into account the short term nature of the loan, and although taking out a payday loan may actually work out to be cheaper than some other forms of finance such as long term credit card debt, the interest rate will still be much, much higher than that of a personal loan. So why do people take out payday loans if they’re so costly?
The first reason is simply speed. Many people resort to a wage advance when they literally don’t have any money left at the end of the month, and yet have bills to pay and food to buy. A payday loan can be arranged on the same day you apply, with the cash in your account the next day. A personal loan simply can’t compare to this – there will be complex forms to fill in, credit agreements to sign and return, credit checks to be carried out… the list goes on. When you need quick cash, a payday loan might well be the only answer.
Another advantage of these loans is the fact that you can borrow only a small amount if that is what you want, just enough to see you through your current cash flow problem. Most personal loans have a much higher minimum amount you need to borrow, and if you don’t need that much then you’re saddling yourself with unnecessary and unwanted debt.
A related point is that the repayment term of a payday loan is, by its very nature, a lot shorter. While the APR rate on a personal loan might appear to be much lower, by spreading the repayments over a longer term you may well end up paying more in interest overall. The combination of having to borrow a larger amount over a longer period is certain to cost more in the long run than taking out an advance of just the amount you need over as short a time frame as possible.
The final reason is that because of the way payday loans work, they’re very easy to be approved for. People with all kinds of credit ratings are likely to have their applications accepted, which is certainly not the case with other forms of finance.
No personal finance expert would recommend taking out a payday loan lightly, especially if you get into the situation of having to renew the loan every month, but taking the above advantages into consideration it’s easy to see why sometimes payday advances can actually be a perfectly prudent way of bridging a temporary financial gap.