Emergency PayDay Loans:
With the globalization of banks and financing companies, the
world appears to be governed by these financiers, the new mantra
being taking loans and fulfilling your dreams. The world runs
on credit and new credit companies are being floated almost
everyday. A common man lives a life of luxury, but is actually
living his life on credit or more aptly in debt. However, considering
the existing trend, it is better to be more market savvy rather
than fear the acceptance of this trend. Life being what it is,
you can never be fully prepared for what is in store for you
next and hence applying for loans or credit can become a necessity.
There are numerous ways of getting a loan sanctioned for personal use. One way is to apply for Payday loan in case of emergencies. The definition of Payday loan is A payday loan or cash advance is a small, short-term loan (typically a relatively small amount) without a credit check that is intended to bridge the borrower's cash flow gap between pay days. This sort of cash advance can also be in a prearranged line of credit like a credit card. Payday loans must be paid back quickly, usually within a few pay periods. These loans are actually meant to help you cover your expenses until your next paycheck. Also called check cashing, payroll advance and deferred deposit, these loans offer a fast way to access emergency money. However, payday loans can be very costly. Borrowers should use them with caution and pay the amount back as soon as possible.. Because the loans have such short terms, the cost of borrowing is very high.
Difference between an emergency payday loan and a
personal unsecured loan:
An unsecured personal loan allows you to borrow large amount of money (usually $1,000 to $10,000). These loans can be paid off in between one and four years. To qualify for the loan, you must have a high credit score or have a co-signer. Emergency payday loans allow you to borrow relatively small amounts ($100 to $1,000). The repayment term of these loans is very short (usually two pay periods), though no credit check is required for the application.
How does a payday loan work and who is eligible for
such an emergency loan
In case of an emergency in the family, say, urgent repair of a leaky roof, you can apply for an emergency payday loan to a lender by offering him a post-dated check of the actual amount borrowed plus a finance fee.. When the time period is up, you need to pay the entire amount including the finance fee in cash or let the lender deposit the post-dated check. You may also write another post-dated check for the amount adding an extra amount of late fee, thus rolling over the money to the next pay period. Until the entire amount is paid within a given time frame, you will have to keep accumulating an additional fine.
The eligibility criterion for a payday loan is quite unambiguous. The applicant needs to have a checking account and a steady flow of income and viola, he is ready to receive a payday loan! However, more often than not applicants who do not have credit card or savings account opt for payday loans since having a check account is not mandatory for applying for this kind of loan. No credit check is run on the applicant for loan sanction.
The Pros and Cons
Emergency payday loan can be a saviour for an applicant when
fast and quick money is required to be accessed in dire situations
with least hassles. Payday loan can be a useful choice when
all other financial options have been exhausted. Because the
loans do not require a credit check, they are easy for people
with financial problems to obtain. The application procedure
is fast, simple and unambiguous. There are various online options
Money obtained quickly has to be repaid even more quickly,
usually within two pay periods. Emergency payday loans are costly.
The processing fee charged is hefty. You must think of applying
for one only after other options have been exhausted. If you
are unable to repay the loan on time, then you are subjected
to bear expensive additional fees. In spite of all the regulatory
laws, you are prone to get cheated if you do not read the fine
Payday loans and the Usury laws
Most of the states in the US have very specific laws that
regulate the lending industry.. Some states even have regulations
on the amount a payday lender can lend to consumers and how
much they can charge for the loan. Few states ban payday loans
outright, viz. New York. These laws vary widely from state to
state. It is also stated that the Annual percentage rate be
disclosed to the borrower of payday loans. 7%. However, the
sad part is that payday lenders easily work around these laws
by partnering with banks in other states (like Delaware). So,
the FTC alerts its consumers by insisting on reading the fine
print before applying for any emergency payday loans.
After going through the pros and cons and exhausting all other financial options,
if you still find that emergency payday loan is the only viable
solution for you, then you must follow a certain number of precautions
like shopping around to find out a trusted lender offering least
processing fees and rates, borrowing only the minimum amount
required and then paying off the loan at the earliest.
Payday loans are short-term, unsecured
loans, lend to borrowers to manage their cash flows between
2. payday loan
Payday Loan Law: to protect the
troubled IntroductionThe law has been made in some States to
control and regulat...