Tuesday 25 December 2012

How Little Can You Borrow With a Payday Loan?

According to Ezinearticles.com:- Generally speaking, payday loans tend to be one of the most flexible forms of borrowing. They don't tie borrowers in to months, or years of repayments. Instead you will have until your next payday to pay off the full amount. Invariably this leads to people only borrowing small, manageable amounts. But what is the absolute minimum?



Well, as with most things in the finance industry, the smallest amount that you can borrow on a single payday loan is variable. Whilst some companies will offer loans of just one pound (although common sense would suggest that these are limited) others will set a threshold of around 50 pounds.

Payday loans shouldn't be taken lightly, nor should you apply for one without first considering all options. Whilst they may be useful for accessing emergency funds in a hurry, the interest rates can make them prohibitive and could lead to further problems in the future. Therefore, even when borrowing small amounts, you need to weigh up the pros and cons.

For instance, if you're borrowing a small amount, let's say 60 pounds for this particular example, you need to be sure that you're getting the best deal on it. For instance, some payday loan providers will have a standard fee for a bank transfer. This might be around five pounds. When you factor this in with the interest, which may be up to 25%, you could end up paying quite a sizeable percentage of what you're borrowing purely on charges. Using the above figures, this would mean that you would have to repay a total of 80 pounds for your 60 pound loan.

The good news for anybody looking for a payday loan, particularly those using the Internet, is that there are plenty of lenders out there. Therefore you have the chance to compare the going rates and get a deal that is best suited to your particular circumstances.

For instance it might work out cheaper to get a payday loan that is based on a daily level of interest, particularly if you are only looking to borrow the money for a few days. However, this is reversed when it comes to a longer loan period, with a fixed rate of interest working out significantly cheaper. Some companies will apply charges, particularly if there are different options for payment (i.e. standard and guaranteed same day transfers), therefore it's worth checking all costs before handing over your details.

Never, under any circumstances, pay an upfront fee for a payday loan though. This will not only prove to be hugely expensive, it is also unlikely to result in anything other than a few suggested lenders who you could have found quite happily, for free on your own.

When it comes to payday loans, you do have to throw traditional conventions out of borrowing. The amount of money and the period of time you have to repay it are completely out of step with almost every other form. They aren't inexpensive by any means, but as a safe and reliable source of money for those with debt problems or poor credit, they can be invaluable. In truth, they work more like if you were borrowing money from a friend or family to tide you over. You'll have to pay it back on the arranged and give a little extra to cover. Thanks http://www.my-paydayloans.co.uk

How to compare payday loans?

Compare payday lenders quickly using the table below. We only list actual lenders (direct lenders who offer, issue, fund and service loans that originate from their website.

Payday Loan Process

According to Tiddee.com : Before you plan to go in for a cash advance it is very important that you are clear about the payday loan process. Typically, a payday loan is a short term loan taken to meet immediate monetary expenses. One can get up to $1500 as cash advance.

Criteria to apply for a Payday Loan:

A Payday loan application criterion is fairly simple. The loan process can be cleared easily by almost anyone. Moreover, there are no credit checks done.
Here is the list of things that need to be fulfilled:

• The person should have a regular job
• Their minimum income should at least be $1000 a month
• The person should be 18 years of age or more, and a citizen of the country he/she is applying to.
• He/she should have a valid bank account

 

How does a Payday Loan process work?

Applying for a payday loan and getting an approval is very easy. To apply, an individual simply needs to bear in mind certain facts which might be required by the lender to give the individual improved and more competent service. Here is how the loan process works:

• Carefully read and fill up the loan application form given to you by the lender or through the website.
• You should answer each obligatory query rightfully to assist the lender to approve the loan application easily.
• After the effective completion of the form, the loan agent will contact you within a few days for the verification of the information, to complete the application procedure.
• You might also have to fax in certain documents such as your employment ID. However, this is not the case in every payday loan process.
• After the approval of your loan application the money gets transferred to your account within a few hours or a couple of days.
• As far as reimbursement is concerned. You will have to pay back the amount within fourteen days from the loan reception date. Usually the charges are automatically deducted from your next paycheck or bank account.

Payment Options

Different companies provide a different payment option:

• You can pay lump sum loan amount on the due date for payment declared in the loan agreement.
• You can pay only the interest along with a portion of the principle loan amount on the date declared.
• You can also pay only the interest on the due date set for payback.

Remember, while choosing a lending company make sure you are well aware of their payday loan process and the interest rate at which they provide the loan. Payday loans can be tremendously risky if you do not adhere to the agreement. Hence, make it a point that you pay the loan on time and save yourself form getting further into debt. www.my-paydayloans.co.uk

What are payday loans?

According to wikipedia:- A payday loan (also called a payday advance) is a small, short-term unsecured loan "regardless of whether repayment of loans is linked to a borrower's payday". The loans are also sometimes referred to as "cash advances", though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Payday advance loans rely on the consumer having previous payroll and employment records. Legislation regarding payday loans varies widely between different countries and, within the USA, between different states.

To prevent usury (unreasonable and excessive rates of interest), some jurisdictions limit the annual percentage rate (APR) that any lender, including payday lenders, can charge. Some jurisdictions outlaw payday lending entirely, and some have very few restrictions on payday lenders. Due to the extremely short-term nature of payday loans, the difference between nominal APR and effective APR (EAR) can be substantial, because EAR takes compounding into account. For a $15 charge on a $100 2-week payday loan, the annual percentage rate is 26 × 15% = 390%; the usefulness of an annual rate (such as an APR) has been debated because APRs are designed to enable consumers to compare the cost of long-term credit and may not be meaningful in cases where the loan will be outstanding for only a few weeks. Likewise, an "effective" rate (such as an EAR — (1.15^{26} - 1) \times 100% = 3,685%) may have even more limited value because payday loans do not permit interest compounding; the principal amount remains the same, regardless of how long the loan is outstanding. Nevertheless, careful scrutiny of the particular measure of loan cost quoted is necessary to make meaningful comparisons.

Payday loans carry substantial risk to the lender; they have a default rate of 10-20%,[4] and according to one study, defaults cost payday lenders around a quarter of their annual revenue.

The loan process

The basic loan process involves a lender providing a short-term unsecured loan to be repaid at the borrower's next payday. Typically, some verification of employment or income is involved (via pay stubs and bank statements), but some lenders may omit this. Individual companies and franchises have their own underwriting criteria.

In the traditional retail model, borrowers visit a payday lending store and secure a small cash loan, with payment due in full at the borrower's next paycheck. The borrower writes a postdated cheque to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower does not repay the loan in person, the lender may redeem the check. If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay.

In the more recent innovation of online payday loans, consumers complete the loan application online (or in some instances via fax, especially where documentation is required). The loan is then transferred by direct deposit to the borrower's account, and the loan repayment and/or the finance charge is electronically withdrawn on the borrower's next payday. According to one source, many payday lenders operating on the internet do not verify income.

User demographics and reasons for borrowing

According to a recent study by the Pew Charitable Trusts, "Most payday loan borrowers are white, female, and are 25 to 44 years old. However, after controlling for other characteristics, there are five groups that have higher odds of having used a payday loan: those without a four-year college degree; home renters; African Americans; those earning below $40,000 annually; and those who are separated or divorced." Most borrowers use payday loans to cover ordinary living expenses over the course of months, not unexpected emergencies over the course of weeks. The average borrower is indebted about five months of the year.
http://www.my-paydayloans.co.uk