Payday Loans Explained – In Depth Article Explaining The Processes Of Payday Loans
Payday loans are a short term cash advance that is given to individuals by qualified lenders. These lenders can include bank institutions, or other financial institutions that cater directly to payday loans. There are a variety of laws and regulations that govern lenders providing payday loans, ensuring that borrowers are not extorted by incredibly high repayment fees, or threatened when they fail to repay.
Understanding payday loans is essential to ensuring that you make the right financial decision when you are in need. Continue reading to learn who is eligible to apply, the various pros and cons of payday loans, and some of the consequences you may face if you fail to repay during the given period.
Who Can Apply For A Payday Loan?
Payday loans in the United States are available to US citizens that can show proof of citizenship, as well as prove that they are employed. Certain lenders may require a check stub, while others may accept a bank deposit printout. Additionally a borrower must be at least eighteen years old and legally allowed to sign binding agreements as needed to solidify the loan terms.
Where To Get A Payday Loan
There is a multitude of places that offer payday loans, some more reliable than others. While the internet has a variety of sites claiming to be able to offer you a payday loan, you should be very cautious. It is always best to go in person to a lender, whether it is a bank or other institution so you can be sure they are legitimate. If you need to apply online, look for lenders that you know, rather than going to unknown websites and entering in your personal data.
Reasons To Apply For A Payday Loan
There are many reasons to apply for a quick payday loan, and often people turn towards payday loans as a last resort. Car problems, family emergencies, or even unexpected bills may require a quick payday loan to ensure that they pay on time. Additionally any instance where a person may lose their job if something is not paid (such as having a car fixed for transportation) is an excellent reason to apply for a payday loan if you have no other options.
Reasons To Avoid A Payday Loan
Payday loans can trap people in debt due to the high APR and the extensive fees that people incur when they default. A $400 loan can quickly turn into a $1,600 loan should a person default and put off repayment. These loans are also taken out because people lack the financial cushion that is necessary for emergencies and other extenuating circumstances. When a person borrows onto the next paycheck, they may end up shorting themselves for something else and will find themselves in the same situation just two weeks later!
Consequences For Repayment Failure
While criminal actions are not allowed for failure to repay a loan, people can be taken to court and have a judgment placed against them to repay. Their new repayment will then include court fees!
Rachel is a finance graduate and pursuing her masters in accountancy from a leading university in Bristol. She reviews pay day loan companies like Full Pocket for their service and writes resourceful blogs helping others to understand the in and out of attaining a Pay Day Loan from lenders like Full Pocket.