Payday loans are usually high interest short term cash advances against an upcoming pay check or other source of funds that the borrower uses for security against a loan. Most cities feature dozens of companies offering such advances, and over the past two years have started to provide their services online.
Typically payday or cash advance loans do not require any type of credit check which which makes these types of loans attractive to those that are self employed or who have less than perfect credit. An additional benefit is that the loan can usually be processed within an hour of applying for it online, and the funds then are transferred to the borrowers bank account by the next business day.
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When You Should Consider Using a Payday Loan
Payday loans are growing in popularity. Payday loans are also known as cash advance, short term loans, payday advances, cash loans, fast cash, fast loans, bad credit loans, deferred deposit, and a number of other things. No matter what you call them, payday loans are designed to get the borrower through a cash crunch.
The problem with this type of borrowing is that the lender charges a handsome fee for the service and it can be hard to get on top of a payday loan. Typically a lender charges up to $20 per $100 borrowed as a service charge and it is due every 30 days. If you borrow $100 today, in 30 days you owe $120. That might not sound like much, but it works out to a very high annual interest rate ( 240% simple interest )
Payday Loans should be used for emergency needs, and not when you simply need cash for going on a holiday or other non-essential needs. Remember that when you are feeling strapped for cash, you might not be thinking as clear as you need to be. Make wise decisions and remember that what ever you borrow, you have to pay back.
Payday loans or cash advance loans are solutions to short term cash problems for individuals with no access to funds by other means. The borrower pays though for this convenience and is charged accordingly.
The general process of a cash advance loan involves the applicant filling out an online or printing off an application to be faxed to the broker. The standard lending requirements are as follows.
- A current checking account
- A source of income
- A regular income of more than $500 monthly
We Give Cash is a large player among the online payday loan companies and wires loans the same day rather than the next business day like other loan companies. They lend up to $1500 against pay advances with no faxing or credit check required. You must have no returned checks on your last month's bank statement to apply.
123 Cash is another major online cash advance lender. They process short term loans of up to $1500 and require no credit check. Advances or loans are wired directly to your bank account the next day and their are no bank statement restrictions or NSF disqualifications.
Fast Funds Online will lend up to $1500 with no credit check. Funds are wired to your bank account within 24 hours and approval for loans are made within 1 hour of your application being filed. Fast Funds Online also provides free access to your credit report for 30 days as a bonus with your loan application.
Paycheck Today provides loans for up to $1000 with funds being wired to your account the next business day. They have one of the fastest processing systems that takes less than one minute to approve your loan.
Almost all payday loan companies do not require credit checks and base their decision on your ability to payback the loan. The funds are wired directly to your bank account and the fees for the loan are also drawn against that account.
Repayment of the loan is not a priority for the lender, as long as they receive their monthly or weekly fee on the money lent. These fees usually range from $10 to $20 per $100 borrowed. That means a $1000 loan has a monthly fee of $100 per month until it is paid back. For example, is you borrow $1000 you now owe the lender $1100 that is due at the end of an agreed upon date - usually 30 days. The moment you accept the money into your account, you are responsible for the fees even if you pay it back in full the next day.
At the end of 30 days, if you are unable to pay back the entire loan, you must pay at least the $100 fee ( based on the above example ). You then still owe $1100 which is then due the next 30 days.
Pay Day loans should only be used if you truly need the money as they are extremely expensive to use. At $10 per $100 borrowed, that is 120% interest on the principle if extended annually. Some States and Provinces have begun taking steps to legislate these type of lenders in an effort to curb this high interest rate.
The alternative for many borrowers is NSF charges, missed payments that can effect your credit, and even such problems as evictions. The decision to borrow should be taken seriously and be sure you really need the money before accepting it.
