A Payday loan is just as the name suggests. It is a relatively small, short-term loan, based on a very high annual percentage rate (APR) that will be paid back as soon as the borrower receives his/her paycheck; thus a “payday loan”. A good majority of the time, one requirement is that the borrower receive his pay check as direct deposit, therefore the loan company can debit his bank account for the amount due before the borrow even receives his pay. Sometimes because of this debit, the borrower is forced to borrow that same amount of money, yet again to stay afloat. These loans may also be called cash advance loans.
One pro of requesting a payday loan is the fact that you may be able to receive funds fast, in as little as twenty-four hours. In addition, you may request that funds be directly deposited into your account. In most instances, this is a requirement by the loan company. For payday loans, there is no credit check, therefore credit score is not a factor as long as you work a full time job and are able to show that you do work and are paid by direct deposit. The payment will be automatically deducted from the individual’s account.
There are several cons to requesting a payday loan, one being that the interest rate is sometimes triple that of a regular loan. Also, these loans normally come due in as little as two weeks. Because payday loans come due quickly, it can cause an individual to become stuck in a cycle of debt. An individual is not able to borrow their money before they receive it, so a payday loan, instead of helping, can only hurt the individual. Before taking a payday loan, one should think about all other alternatives.
Payday loans are not for everyone. It looks very good, when the money shows up in your account. They can be easy to get but very hard to repay and a good bit of the time, an individual does not know everything they’re getting into until they’ve received the funds and it’s time to repay. When repaying a payday loan, it will cost you much more to pay back than it is to receive. Before you apply, do your research and know for sure what you’re doing, how much you’re getting, but more importantly, how much you’ll be repaying!