|
| By: Sha - at February 4, 2013 |
What are Payday Loans and why Payday Loans?
Why Payday Loans
 Many
people in countries such as the USA, Canada, the UK, Australia, and some
other countries in Europe are turning to payday loans to deal with their urgent
financial needs. In truth, millions of people from the above mentioned
countries are taking out payday loans to solve their immediate financial crisis.
However there are concerns from many borrowers among others whether or not payday loans, which are also known as cash advances, are a viable
option to solve a short-term cash crisis. Payday loans are not meant to solve long-term
financial hardships. It is a quick but expensive solution to an emergency
where cash is desperately needed.
What are Payday Loans
Payday loans are short-term loans that come with very high interest rates.
Payday loans are basically designed for people who are working but cannot make
it through to the end of the month until their next payday or paycheck. It is designed for any person who needs some fast and instant cash that
he or she cannot get immediately from other sources.
These are people who have no money for a given period of time or who have a cash
crisis in between their paychecks, and often turn to lenders who provide
payday loans.
How to Get a Payday Loan
Anybody can apply and get a payday loan provided they are eligible to apply for
a payday loan. Also payday loans do not require a credit check where most
loans from traditional sources like banks do. The requirements to be able
to apply for a payday loan may slightly vary from country to country where this
kind of loan is available. The following is the criteria for anybody who
is applying for a payday loan:
- The applicant must be a resident of the country where the application is
being made.
- The applicant must be at least 18 years of age.
- Must be employed full-time.
- Must have a current checking account with a debit card.
If an applicant fulfils the above requirements then he or she may
qualify for a payday loan up to a certain amount of money. Based on the
information provided by the applicant on their application, the loan's dollar
amount is determined by the payday loan institution as well as the interest
rate.
When an applicant applies for a payday loan online, the application is
processed the same day and the decision is also made during the same day.
There are no waiting periods or consideration periods that traditional sources
like banks have, making payday loans an attractive option for people who need
cash fast.
When an applicant is approved, the lender quickly transfers the money to the
applicant's bank account typically within 24 hours.
How and When Repayment is made
 As
the name suggests, payday loans are to be paid by the borrowers on their next
payday or when the next paycheck arrives. Once the applicant receives
their next paycheck, the borrowed amount plus a sizeable interest charge is
paid. There might be options to pay in
installments depending on the payday loan provider and depending on the amount
that was initially borrowed. Repayment terms are specified in the loan
terms which are presented in detail in the loan application.
Who Needs or Applies for Payday Loans
Most people who apply for a cash advance might need to pay unpredictable or
urgent bills, make a credit card payment, pay their mortgage, or pay their rent.
Many people do not want to ask for help from their family members, friends, or
coworkers because they do not want others to know that they are having money
troubles. They cannot get quick and instant cash from the banks or credit card companies they have accounts with due to
their credit situation. Also it generally takes some time to get approved
by a bank for even the smallest loans. As a last resort they turn to these payday loan providers
in order to get the money they need.
Recommendations
Payday
loans are by no means a long-term solution to a person's financial crisis.
It might be an inevitable or handy option when other traditional options are not
able to deal with your immediate and urgent cash shortages. Besides if you
become reliant on this type of high interest loan, you will end up
repeating the same course of action leaving you no room to get out of it.
You will be paying a lot of money each time you take out a payday loan in
the form of interest. Sometimes people get stuck in this cycle where they
consistently use payday loans just to make ends meet.
 You should always be looking for other alternatives to payday loans.
There are actually many ways you can avoid taking out a payday loan frequently,
and keep you from getting stuck in a vicious cycle. If you have a cash
crisis often and if you do not have enough in your savings or none at all, then
you should consider doing a bit of extra work during your free time. You can ask your manager
if they can help you get some extra hours, or you can tell them you are
interested in getting some
overtime. If you can make some extra money doing some extra work you can save it
for a rainy day.
You can also seek out an evening part-time job or a part-time job that you
can work on any other
day and time when you are available to do so. If you have unwanted and
unused items in your house, you could possibly sell these items instead of going
to a payday loan establishment. If you have a special skill, then you can utilize that and earn some extra
cash on the side.
If you are in need of fast and urgent cash to pay bills that just cannot
wait, then you can make a request to the companies you currently owe for some
more time and flexibility with payments. You can ask local banks if they
could help you with a small loan. If you need to make a credit card
payment but you do not have cash, then you might request the credit card company
for a few more days to
make the payment. There are many ways to earn some extra cash and avoid
taking out payday loans on a regular basis. Payday loans are great if they
are absolutely necessary and if they are used sparingly. The point is to
not make them a regular occurrence because soon, all the extra money you will
need to pay towards the interest can only make your financial situation worse.
Final words
There
is no denying the fact that hundreds of thousands of people are solving their
financial crisis by taking out payday loans. Payday loans were recently
the focus of debate in the Ohio legislature where some state representatives
were advocating for cash advance services to be banned. The push for
completely removing them as an option did not get very far because it is a hard
truth that many Ohio families rely on these services. Payday loans can
sometimes be the only option available to you. If you are solving your
cash crisis in the short-term, then payday loans can be very handy. If you
are looking for long-term solutions to your financial problems then there are
better strategies like securing additional employment, selling items you no
longer use, or picking up extra hours at work. Cut down on unnecessary
purchases and be realistic with your budget. Payday loans can be sometimes
avoided by working a few extra hours, teaching students, consulting your banks
or other financial institutions for a loan, and by urging your utility companies
to give you more time to pay. By budgeting your money better and having
an honest understanding of your financial position, payday loans can be avoided
completely.
Personal Finance
Attracting Wealth: Turning On Your Money Magnetism
Cosigning: Should You or Not?
How Credit Card Users can Help Fight Card Skimming Fraudulent Activities
How Safe is Online Shopping; What are the Risks Involved?
How Late Payment and Minimum Payment Affect Your Credit Scores
Where and How to Sell Unwanted Gift Cards
How Much is Gold Worth?
What are Payday Loans and why Payday Loans?
How Credit Scores Work and Why Credit Scores are Important
How Can You Save Money Using Online Coupons?
Do You Need Income Protection Insurance? |
