We all know about payday loans. And most of us use payday loans every month when they are out of cash. But only a few of us know how a payday cash loan actually works? We do not have payday loans information with us. What we do is, send in the loan application and get the money. That's it. We do not know anything else. I mean most of us have no idea about payday loan info or something.
Let me tell you that if you manage to learn about payday loans, not only you will be able to save a lot but you will be in a better position to judge and compare different payday loan lenders. Interested? Here we go.
Payday Loans: Basic Info
Payday loans are short-term loans designed specifically for those who need cash almost immediately or instantly. These are unsecured loans and do not involve any collateral. This means, you do not have to show anything to your lender to get a payday loan except for a proof of income/employment. Payday loan lenders only ask for a proof of employment.
Payday Loans: Loan Limit, Tenure And Interest Rate
The limit of a payday loan varies greatly depending on several factors including your geographical location, lender policies, state laws, rules, regulations etc. So there is no fixed upper or lower limit of a payday loan. However, generally a payday loan amount range from $50 to $1000.
The duration of a payday loan is minimal. All payday loans are due on the next paycheck of borrower except for agreed otherwise. So in any case, the maximum tenure does not exceed 30 days. However, your payday loan lender can extend the due date. They can do that. But your lender may or may not charge you a fee for that. It depends.
Well, interest rate is the biggest issue about payday loans. The interest rates are very high. Its between 25 to 25 percent depending on several variable factors. Lenders do not charge interest rather they charge you a one-time fixed amount that is equal to 15 – 25 percent of the principal. So this means you have to pay at least $115 per $100 principal. That makes payday loans very expensive. But this is they way it is,
Payday Loans: Eligibility
This is the most interesting part. The eligibility criterion of payday loans is very simple and straight forward. Almost every one can get a payday loan. This is because they need to facilitate people. They need to help those who need money right away. Here are eligibility details for a payday loan:
- At least 18 years or above. Or in some parts of the world, you have to be 21 or above to be eligible for a payday loan.
- You must be employed. You have to show your income/employment proof.
- A bank account that is in good standing.
- Government issued identity card to prove your identity.
Payday Loans: How They Work?
- You have to send your payday loan application to the lender. There are several ways to send your application.
- Along with your application, you have to send all the supporting documents or any other documents that your lender asks for.
- Once your application and all the documents reach your lender. Then it is processed and reviewed. The processing time of a payday loan is minimal. Some lenders will review your application within 5 minutes while others need a couple of hours to do so.
- You will be notified in both the cases whether your application gets accepted or rejected.
- In case of approval. Loan amount will be sent to your account immediately. And you can use it right away.
- Your lender withdraws the loan amount from your bank upon your instructions as soon as your account is credited again.