A complete overview on Payday loans

From different surveys, it is seen that the number of customers taking payday loan as well as payday lending companies are increasing frequently. If you are a person taking the payday loan for the first time or want to gather information regarding payday loan, then this article will be of great help to you.

Definition of payday loan:-

Payday loan is a very short term loan. Usually the term is 1-2 weeks. There are other names of payday loan like - "Cash Advance", "Paycheck loan", "Check loans", and "Payroll advance loans". After you get your paycheck, the loan is to be repaid. If you can not repay the loan amount plus lender's charges for payday loan on your payday, you can rollover the loan amount by paying extra fees to the lender plus you have to pay the interest along with for the rollover period. So, payday loan can be termed a "Loan Sharking".

Necessity of payday loan:-

By the end of the month, you may face some problems in maintaining some urgent family expenses like paying off your Medical Bills, Phone Bills, and Electric Bills, House Rent or some other utility bills. These things usually happen when you fail to maintain a proper budget at the time of getting your paychecks or not keeping your expenses up to your income limit. Hence in order to meet such urgent expenses you need a payday loan.

Payday loan companies:-

There are so many companies who are promoting check cashing facilities online. Besides some banks and other financial institutions also provides you with a payday loan. You can apply online for a payday loan or you can visit physically to an institution to avail a payday loan.

Conditions to be satisfied to get an instant payday loan:-

The criterions of different payday loan companies are-

1. You must have a job or there should be a regular source of income.

2. You should have a Checking A/c in a bank.

3. You should be an US citizen.

4. You should be at least 18 years of age.

5. Your monthly income should be at least $1000 Per Month.

Best application time of payday loan:-
If you apply for the loan from Monday to Thursday, you will get the loan on the next working day, i.e. Tuesday to Friday. If you apply for the loan on Friday, then you will get the loan on the next Monday, and if you apply on Saturday or Sunday, you will get the loan on Tuesday.
So the best time to apply for the loan is Monday to Thursday.

When will you get the money?
As the process is very simple to get the loan amount, in general you will get your loan amount within 24 hours of application. Company will check your documents and verify your data with an automated system named as VPN Based software, and then approve your loan. The entire process of verification of your identity and depositing the money to your Checking A/c takes 24 hours of time. There are some companies who will deposit the loan amount in less than 24 hours.

Costs of payday loan:-
Usually a payday loan company charges 15 to 30 USD per $100 borrowed. So, if you borrow $100, you will have to pay 115 to 130 USD on the very next payday. The APR of payday loan cash advance interest boosts up to 391%.

Maximum limit of payday loan:-
If you are taking a payday loan for the first time, you may get up to $500 for the first time. After you repay back your first loan amount in time, you can avail more than $500 when you revisit the company for another payday loan.

Think before taking a payday loan:-
1. You should keep in mind the APR factor of the loan before taking it. You should find the company which is charging a lower APR than its competitors.
2. You should take care about the privacy of your document and information. So, if the tendency of the company is to process applicant's information in an encrypted page, you should think that your information will not be licked out, and then you can proceed on.
3. You should read the company policy and legal matters complied with before submitting an application form to them.

Repayment of payday loan:-
The lender company will take the money off from your checking A/c on the date of your payday. You should be ready and aware about your payday and the amount to be repaid. If you fail to repay the loan on the scheduled date then you may have to ask the lender to rollover your loan amount.

Alternatives to payday loan:-
1. In order to avoid taking such high interest loan like payday loan cash advance, you should make an appropriate budget which is according to your income.
2. You may also save certain amount of money from your paycheck every time you get it.
3. Before taking a payday loan cash advance, you should be looking for a loan from a friend or relative as they will not take any interest for lending the money to you. Another thing is also involved here that if you not be able to repay the money in future, you may not have to run away from your creditors.



Posted by Angelina Rosario from EzineArticles.com for more http://www.my-paydayloans.co.uk/

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.

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.
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