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Emergency Payday Loan

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.

Payday loans:

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 available.

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 print properly.

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.

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