What’s the Deal with Payday Loans?
You see the signs and advertisements everywhere. East money in as little as 24 hours! Apply for a loan and get up to $1,500 today! But what is a payday loan, exactly, and are they useful to get?
Payday loans are simply loans that are based off of what you get paid from your place of employment. There is no collateral needed when you apply, and you do not have to undergo a credit check. For many people, this is the golden opportunity that they have been waiting for, because they don’t have a good credit score, so they cannot get a loan from another source, such as their bank. A payday loans company doesn’t check scores. They only look at how much the applicant is predicted to make on their next paycheck, and base the loan off of this amount.
Payday loans may also be based on other factors, as well. Every state has specific regulations designed to protect borrowers, so that they do not borrow too much money at a time. It’s easy to want to borrow the maximum amount, which may be $1,500, even when you don’t need that much. Paying it back, however, may not be that simple. So state laws may cap the lending companies so that borrowers may only borrow a certain amount, such as $500, at a time. This way, the borrower has a better chance of being able to repay their loan on time. Additionally, lenders may place their own caps on loans, or they may limit a first-time borrower to a certain amount, until they can prove they are responsible and pay it back.
Getting payday loans require just a small bit of information, another factor that make them popular. Borrowers have to be 18, will be asked to supply their current checking or savings account information, and will be asked about their income. And since this all can be done online nowadays, the ease of getting a loan has increased. Simply log on to a website and within minutes you may be eligible for a loan.
Payday loans can be very useful, if you have a true financial emergency and don’t have anywhere else to turn. If you know for sure you can repay the loan, along with the finance fees, then by all means, go for it. But be careful you don’t fall into the payday loan trap, and have to keep taking out loans to repay your previous ones. Read the fine print, go over your finances and budget, and make sure that a loan is definitely the right decision for you.
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