Find Out About Payday Loan Advantages

By: Ethan Hunter

This article will be talking about Payday Loan Advantages. Advertisements In the last few years for payday loans are popping up all over Payday loan companies sometimes advertise by direct mail, so you may consistently see ads arriving in your own mailbox. Other places I have seen Advertisements are on shop signs, in newspapers, on billboards, and principally on the Internet.

Sometimes they're called payday advances, check loans, cash advances, or even post-dated check loans, but all of those terms mean exactly the same thing - a loan to get you by until your next payday. While you've seen the ads, you may not know what payday loans how they work or what they are, or how to go about applying for one.

A payday loan is a short-term loan, usually for 14-30 days, that is paid back by agreeing to an electronic withdrawal to be deducted from the borrower's bank account on their next payday or by giving them a post-dated check. Borrowers may be getting a loan for of anywhere between $100 and $1,500, depending on the borrower's income and the lender's policies. Just like every other kind of loan, there is good and bad things with this type of loan.

Payday loans have a plus side, they are easy to get and easy to apply for. You will be asked to fill out a short application that includes telephone number, monthly income, where you work, and your home address. You will also provide information about your bank account, including the name of your bank and your account number. In general, the application is much simpler than those required by traditional banks, and less verification is required.

Borrowers are asked to have their latest bank statement, a fresh pay stub, and a copy of their driver's license. There is no credit check involved, which shortens the time frame considerably. In all the process takes a total of just a few minutes, instead of days or weeks, and can be approved immediately, resulting in the borrower given a cash loan in approximately half an hour. Once approved, the borrower writes a post-dated check for the date of their next payday, and for the amount borrowed, plus the lender's fees.

Getting a payday loan from an Internet lender is even quicker and simpler. Borrowers provide their bank account number and the loan money is direct deposited into the borrower's account, oftentimes within a matter of hours. Repayment is made the same way, by direct withdrawal from the borrower's bank account, for the amount and on the date specified in the loan agreement. Repayment arrangements vary and some companies give the borrower an option to roll the loan over by paying an additional loan fee. The borrower, therefore, has the option of paying off the entire loan on the original date agreed, or of paying additional fees to extend all or part of the actual loan to a later date.

The other major Payday Loan Advantages to getting a payday loan are that there is no collaterol required and no credit checks involved. Payday loans are available to people who are working, whether or not they have good credit or are current with all their monthly obligations. A person can qualify for a payday loan even without owning a home or a car, or any other form of real property.

Payday loans can be especially worthwhile in an emergency situation. Maybe you have an pressing medical needs or your vehicle breaks down and the immediate costs were not in your monthly budget. Almost everyone finds themselves in these types of situation where they seriously need some extra money and don't have other resources or savings to tide them over. In these cases, a payday loan can be a lifesaver.

Payday loans can be easy to find. The borrower can find the particular loan that best fits their needs, without ever leaving the luxury of their own home. There are strictly speaking hundreds of websites dedicated to either making payday loans or to helping the consumer locate the best lenders.

Of course there Is a downside. As with any type of borrowing and lending, there are disadvantages to payday loans. Most payday loan companies offer flat fees that are based on the amount borrowed and the amount of time until it is paid back in full. For example, they cost more than traditional loans because lenders are allowed to charge higher loan fees or finance charges, for short-term, unsecured loans.

For example, a lender can charge a flat fee of $15 per $100 borrowed, which doesn't seem like much at first glance. However, a $15 fee per $100, when examined on an annualized basis, amounts to an annual percentage rate (APR) of 391%. In fact, the average APR for payday loans has been estimated at 450%.

In addition, more fees come into play if the borrower needs to roll the loan over. If, for instance, the loan were rolled over three times it would cost an extra $15 each time, in addition to the original $15. In that case, the original $100 loan could cost the borrower as much as $60.

If you are contemplating a payday loan, it is important to shop around, make sure you understand all of the fees involved, and make sure you borrow only enough that you can pay it off in full by your next payday.