What You Need to Know About Payday Loans

Life has unexpected turns, and there will be times in your life when you need some quick cash to handle some emergencies. What if you do not have the cash at hand or in the bank? What do you do? 

At times like these, you can utilize the services of a short-term loan lender and use the money to solve emergency issues. And all you gotta do is pay the money back later with some interest. The good thing is that your income determines this money, and if you have a good income, you have a high chance of getting a good sum of money on your loan.

What You Need to Know About Payday Loans

What is a Payday Loan?

A payday loan, also known as a cash advance or check advance loan, refers to short-term money borrowed tethered to your income. Typically, the lender looks at your income and determines the interest, often quite a high one, depending on what you earn. Payday loan lenders typically lend you the principal from the portion of your income, which means that when your next paycheck is disbursed, your loan principal will be deducted from there. Then, you will pay interest depending on the agreed amount over a set period.  

Payday loans are accessible to anyone with a paycheck, and you do not require collateral to access them. All you have to do is submit proof of employment, mainly a pay stub. These loans are known for their high levels of interest rates, but over the years, several laws have been put in place to regulate these interest rates

Today, these laws protect borrowers from being taken advantage of by lenders, making them great places to get salary advances in case of an emergency. However, most loans are generally $500 or less, which makes them small loans. The small amounts do not require much collateral, and it is easy for most people to repay them in a short time, usually in a single payment. 

How Do You Get Access to A Payday Loan?

Getting access to a payday loan is easy. Most lenders are available locally through their small to average credit stores or online through websites such as Maxlend Loans. Whichever way you choose, you only have to provide some basic information about yourself and fill in credit applications. You will also be required to attach your proof of employment, such as a paycheck, when applying. The paycheck serves as proof that you are employed and determines the amount of money plus the interest you will receive. 

The information you provide will be of use in the approval process. Your loan principal is often a percentage of your paycheck, and it is used as the loan’s collateral. The loan lenders do not conduct a full credit check to determine your ability to repay the loan. 

How Do You Receive Your Money?

Once your payday loan application is approved, you will receive a wire transfer to your bank, a mail check, or cash, depending on the lender or your chosen alternative. Typically, you are expected to repay your loan within two weeks or by your next payday. It is important to understand how the interest rates of these loans work. Most payday lenders charge up to 400 percent annual percentage rates (APR). Although there are several state and federal regulations regarding this, legal loopholes, and your lender might charge you high-interest rates. Therefore, it is important to conduct some prior research to understand what you are signing up for before getting the loan. 

Final Thoughts

Some emergencies require you to have some cash at hand even when your paycheck has not been disbursed. If such an emergency arises, you can utilize the services of a payday loan lender to get some money to attend to your needs before your paycheck arrives. These loans attract high interest rates, and you should conduct some prior research before getting one to ensure you get the best deal possible for you. Usually, the loan limit is below $500, and you are required to repay the loan within two weeks or by your next paycheck

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About Dequiana Jackson

Dequiana Jackson, Founder of Inspired Marketing, Inc., helps overachieving women entrepreneurs conquer limiting beliefs and create marketing plans that win. This includes one-on-one marketing plan development, digital product creation, web design and content marketing. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog, Entrepreneur-Resources.net.

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