Payday loans are cash loans with a short term. They are generally given based on the personal check of the borrower which is held for a deposit in the future. In some cases, the lender keeps an electronic access to the bank account of the borrower. The people who take out the loan will have to write down a personal check. The amount of the check will be equal to the amount borrowed along with the charges and rates levied. Alternatively, the borrower will provide electronic access to the bank accounts.
The lenders will keep the checks till the next payday of the borrower. Once that day comes along, the borrower will have to pay the amount along with the interests and charges. Once the monies have been repaid, the lender will give back the checks to the borrower. Alternatively, the borrower may simply pay the charges so that the loan is rolled over to the next period.
Here are a few things you should know about speedy payday loans.
Speedy Payday Advance Requirements
In order to get this type of a loan, the borrower must have an open bank account. The account must be of a good standing. The borrower must also have a steady source of income. Identification is also a must. On the other hand, the lenders do not conduct a check on the borrowers about details such as a credit rating. They also not check if the borrower has the ability to pay back the loan.
Facts about the Loan
Here are some of the features which are applicable to any sort of payday loan that you take irrespective of its value.
- The amount of money can be as low as $100 or as high as $1000. The amount depends on the legal maximums of the state. Typically, the amounts range around $350.
- The loan term is two weeks on average.
- The annual interest rate for a typical speedy payday advance is around 400%.
- Finance charges are levied on each transaction and they range from $15 to $30 for a loan of $100. These charges can affect the interest rates making the APR as high as 780% in some cases.
You should remember that you will have to pay a higher annual interest rate as the term of the loan decreases.
The Legal Status of Payday Loans
Most states in the US have laws in place that regulate the costs and rates of the payday lending industry. As a result, any of these lending businesses which have a high cost will have to be authorized by the state before it can do its business. Many states have legally placed a cap on the rates levied in such small loans.
Comparison with Other Loans
Payday loans are rather unprofitable for the borrowers. When compared to the other types of cash loans available, you will find them to be rather expensive. Take an example of $300 loan with a term of one month. In the case of an average credit card, the finance charge will be %13.99 approximately with an annual interest rate of nearly 57%. On the other hand, if it were a payday loan, the charge would be $17.50 for every $100. The annual interest rate can be as high as 426%
The Advantages of Speedy Payday Loans
There is no denying the benefits that payday lending provides for many people. Here are some of the benefits that this type of loans provides.
- The amount of money that can be borrowed is flexible. Therefore, people can take out only as much money as they need. The only limit on the amount is what is determined by the income of the borrower.
- Due to the ease with which these loans can be taken out, they are perfect for emergency situations such as repayment of bounced checks or medical emergencies.
- The application process is quite simple and easy. Only a few documents are required to be given at the time of application.
- As there are no checks performed on the borrower, the money will be given to the individual within minutes. In fact, some payday lending institutions and lenders take pride in being able to provide the money in a very short period of time.
- You need not worry about a bad credit rating with these loans as they are separate from the banking transactions.