If you are reading this, chances are that you have come across a barrage of payday adverts. Consequently, you ought to have this question lingering in your mind; are payday loans a worthy idea?
Lately, this industry has been under a lot of scrutiny by various government authorities as they ask the same question as you are; have payday loans been good alternative? Well, information is power. We take a closer look at some important information below, so pay attention.
Payday loans are a suitable quick fix to your emerging issues. Conventionally, these loans are meant to help individuals who have run out of funds towards the end of the month and they happen to face an issue that needs their attention and can hardly wait. The payday lenders operate online as well as in stores.
The payday lenders often deposit the funds to your bank account, this is done after they approve that you’re ready for the loan. The payday lenders often withdraw the amount loaned alongside the interest from your account as soon as its due.
Most payday lender issues relatively small amounts but others issue significantly large amounts if you as a borrower happen to have a reliable credit score thus you can access the maximum amount.
As the name indicates, payday loans are often due in the next borrower’s payday. They are distinct from the conventional bank accounts in the way they work:
Short Term Durations
The duration of time a borrower has to stay with a loan is shorter compared to other loans. This is often in the next payday. This implies that the loan term ranges between a period of two weeks to one month.
Depending on your geographical location, there are certain regulations imposed on the amount you can borrow. The most common amount is $ 500 although the bracket is from $300 to $1,000.
No Installments Required
Unlike the conventional bank accounts, payday loans do not require any installments. This implies that if you borrow $ 500 you repay the full amount inclusive of interest and principal amount.
Unlike the conventional bank loans that base the interest on your credit ratings, payday loans charge all borrowers a standard rate.
No Credit Check (Some Lenders do Credit Check)
Unlike conventional bank loans that require you to have a good credit rating so that they can offer you a loan, payday loans don’t have a credit check. You can get a payday loan with a good or bad credit. The only requirement is a bank account, Identification card, and evidence of a source of income.
Unlike other bank loans, every time you acquire a payday loan, you provide a signed check or any approval that gives the lender authorization to withdraw money from your account. This serves as security in case you fail to repay the loan as planned.
Payday loans give a borrower the opportunity to renew the loan, this happens when the borrower feels that they can’t manage to clear the loan on time hence they extend the duration by renewal. This requires that the borrower pays a fee equivalent to the interest and extend the duration of payment by two weeks coupled by another interest payment.