Finance and Personal Lending

Personal finance news and information.

Chances are you have heard the term “payday loan” before, but do you actually know all of the details of what these loans really are? It is crucial that you get this information before applying so that you can make the best possible decision. A payday loan can be a real life saver if you are in a tight financial spot, but you’ll need to learn as much as possible first. The more time you take to get this information, the more likely it is that you’ll get exactly what you need.

Payday Loan Definition

A payday loan, which is sometimes called a “short-term loan”, is essentially just a cash advance on your pay check. This means that you will need to pay back all of the money you borrow within a period of no more than 2 weeks. There will of course be interest that you’ll have to pay on the loan, and the rate depends on a few different things. A lot of payday loans offer the option of slightly longer payback periods of up to three months.

Approval isn’t guaranteed

No matter what you may have heard from other people, your approval for a payday loan is never guaranteed. It’s true that a lot of people who apply for these loans end up getting them, but there are still some basic requirements you will need to meet.
Some of the basic requirements to get a payday loan include:

• Being a legal citizen of the country
• At least 18 years of age
• Active checking account at a bank or credit union
• Gainfully employed

Borrowing Amounts

When it comes to how much money you can borrow with a payday loan, it all comes down to how much you make as well as what your credit is like. The more money you make from your job, the higher your borrowing limit will be. With payday loans there is typically a borrowing limit of around a few thousand dollars. Some lenders are willing to give out higher amounts than others, so you will need to keep that in mind as well.

Finding the right lender

You will definitely need to take some time to find the right lender to borrow from, because otherwise you might end up getting a raw deal. If you don’t want to pay more than you absolutely have to for your loan, it is crucial that you spend a decent amount of time doing this research. A reputable lender will most likely be able to give you a fairly good deal on the loan you need so you don’t get stuck with lots of extra/hidden fees and charges. There are quite a few shady lenders out there, which is all the more reason to closely review your options before making a final decision.

What happens if you don’t pay back the loan

If you fail to pay back the loan on time, your credit can and most likely will be affected in a big negative way. The last thing you want is such a big strike against your credit, so you will need to make sure that you can pay back the amount you borrow. You may be able to get an extension to pay back your loan, but you’ll be facing some serious additional fees. Once you are late on your loan, even if only by a day, it makes paying it back in full quite difficult. The best thing you can do is to pay back all of the money you borrow by the due date. You should make a point of allowing the lender to automatically take the money from your account on the date your loan is due to be paid back.

Final Thoughts

Getting a payday loan is a great option for many people, but you will need to arm yourself with knowledge before deciding whether or not to apply. If you have decided to try getting one of these loans, you will be able to fill out an application online. This process won’t take very long at all, and you should be notified as to whether your application was accepted or rejected within 24 hours after submitting it.

These days payday loans have become an incredibly popular option for those who need to borrow money, and it’s important that you know why before making a decision. While it’s true that there are many benefits associated with payday loans, they aren’t right for everyone. The more time you take to look into these loans, the easier it will be to decide whether or not to apply for one. The last thing you want to do is to rush into a final decision that you will end up regretting later on.

What is a payday loan?

First you will need to know what exactly a payday loan is. Simply put, it is a short-term loan that you will need to pay back within 2 weeks (with your next pay check.) These loans are typically for smaller amounts, but it all depends on your qualifications. Some people are able to borrow more than others, but the maximum amount is somewhere around $1.500 to $3,000. The more money you make from your job, the more likely you will be to qualify for a higher borrowing amount.

Your Credit

It is important to keep in mind that an overwhelming majority of payday loan lenders do run credit checks on applicants, but having bad credit doesn’t necessarily mean you will get rejected. The fact is that a lot of people who have less-than-perfect credit get approved for these loans all the time, so you shouldn’t let your score discourage you from applying. There is never any guarantee that you will get approved, but the better your credit is the higher your chances will be.

When to take out a payday loan

You only want to take out a payday loan if you are in desperate need of cash for some very important expense. If you have an auto repair, hospital bill or some other crucial expense that has suddenly come up but you don’t have the money to cover it, a payday loan can be an excellent option to explore. Most of the people who apply for these loans do so because they need a significant amount of money fast. If you are approved for a payday loan, you should receive the funds within 24-48 hours at the latest. This is why payday loans are such a good option for emergency expenses that are time sensitive.

Interest Rates

It’s also important that you remember that payday loans typically come with higher interest rates than other types of loans, though they usually aren’t as bad as many people make them out to be. The rate that you get for your loan will depend mostly on your credit, though there are other factors that come into play. Those who have good credit can expect to pay a more reasonable rate than those with a very low score. The interest on these loans has definitely been exaggerated though, so don’t let that scare you off.

Paying back the loan

If you are seriously considering applying for a payday loan, you will need to keep in mind that you’ll only have about 2 weeks to pay it back. Some lenders will give you an extension if you are not able to pay the loan back on time, but you will incur some pretty hefty penalty fees as a result. You will definitely need to make sure that you only take out as much as you can afford to pay back. It is highly recommended that you take the time to crunch the numbers and decide how much you can realistically afford to borrow before filling out an application online.

Final Thoughts

You do not want to rush into getting a payday loan, because doing so could come with disastrous results. Failing to pay back one of these loans will result in a big negative mark on your credit report, which is the last thing you want. Payday loans can be very helpful for many people, but they aren’t a good borrowing option for everyone. If you have been denied different types of loans in the past, you may want to think about applying for one of these. While there’s no guarantee your application will be approved, it is still worth trying.