Payday loans demystified
You’ve heard a lot in favor and against payday loans. But what exactly are these loans and how can you use them. Here is a simple lowdown on payday loans for the uninitiated.
Payday loans are short-term loans for employed people. This helps employed people to tide over difficult situations where they need money immediately and cannot wait till their salary is due. These loans are very convenient and handy, but have one small problem — a high interest rate. Interests on payday loans have been known to cross the 500% mark!
The good thing about payday loans is that you don’t have to wait for a credit check by the company. A payday lender doesn’t need to know your credit history and they will not bother to ask you for it. While payday loan companies differ in the information that is required, most of them ask for the following information when you apply for a loan: Proof of employment, proof of a checking account, last bank statement, social security and driver’s license numbers, and proof of residency.
To apply for a payday loan, you only have to give your lender a personal check for the amount borrowed plus a fee. This check is cashed on a future specified date. And how do you get the amount? Once the company approves your payday loan, the amount is deposited into your account. This is done pretty quickly, usually by the next business day. If you cannot repay your payday loans on the date specified, you can extend the loan period. You will only have to pay an additional fee.