A payday loan, as the name suggests is a type of cash advance loan for a relatively small amount of money that is lent for a short amount of time which is usually until the next payday. As these loans are made to cover an emergency cash need until the next payday the usual length of the loan is about two weeks.
The eligibility criteria for this type of borrowing are usually very low and very simple. A prospective borrower will need to have a banking account to repay the loan from, be over 18 years old and be in employment, (or have some form of provable regular income). The credit score or credit history of a prospective borrower is not important, but they will need to prove that they fill the other eligibility criteria.
The application process for these loans is very simple. They can be applied for online or in a loan store. If the borrower applies online then they will need to provide telephone numbers so that their eligibility can be verified. When applying in a loan store the borrower will need to take things like bank statements and pay stubs to show that they meet the criteria.
When the loan company receives a completed application together with the proof that they ask for they can consider the loan. There is no credit check run all careful consideration and risk assessment. As long as the applicant meets the criteria that the company has decided upon the loan will be granted. These loans can usually be paid out very quickly, anything from one hour to one working day.
This type of lending usually has fixed charges for each loan rather than applying interest in the traditional way. Due to the short nature of this type of borrowing interest would not normally cover the costs incurred in making each loan. So when this type of borrowing is compared to a traditional types of funding it would appear that interest charges are very high.
There are many different regulations and laws covering borrowing and lending. When it comes to this type of cash advance these rules vary considerably from state to state. It is worthwhile to check the particular rules that apply when considering this type of borrowing, to make sure that regulations allow the money to be useful. There are special regulations and borrowing concerns for military personnel.
Many people have concerns about the charges for this sort of lending. However when looking at the expense that may happen if funds are not made available then this sort of funding can be very cost-effective. Charges and expenses that may have to be paid if emergency funding is not available include things like late fees for utility or credit card payments and especially high are the costs and charges made by banks and merchants when the check is bounced.
Whilst this type of borrowing is not ideal it is often the only type of borrowing available to a number of people. There are also situations where other types of borrowing may take too long to access. When used responsibly a payday loan is very useful to those in need.
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