If you’re thinking about borrowing a payday loan, you must know the basics. Here is everything you need to know – what are payday loans and how do they work?
Do you need money to fulfill your medical expenses, but you’re a little too tight on budget? In this case, a payday loan might save your day. But, how exactly does a payday loan works? And what makes it so controversial? Here’s everything you require.
What are Payday Loans?
A payday loan is a short term yet a high cost/interest loan, usually upto 500$ or more, that is generally to be paid on your next pay day from your next salary. But what exactly is it used for? A payday loan can be borrowed by individuals if they’re short on budget yet have to pay their medical, housing or family expenses. It is an alternative to borrowing money from a friend or a relative.
How Payday Loans work?
A payday loan can be borrowed from any lender – at an exchange store or online. The lender will check you account information to ensure your monthly income and you’ll be able to get cash in around 10 to 15 minutes, if, you’re borrowing it at a store. However, if you’re applying online, then, you’ll be able to receive your money the next morning.
In case you’re borrowing the loan online, you’ll be required to sign a check to give permission to the lender to withdraw money from your account on a day after your next payday, usually in 2 to 4 weeks.
However, if you’re applying through an exchange store, then lender will fix an appointment for you to repay the loan in 2 to 4 weeks.
If you’re worried about the risk of fraud, we propose that you must prefer a direct lender. A direct lender ensures that additional costs are avoided by reducing the risk of fraud.
What are the types of Payday Loans?
There are various types of payday loans available for you, however, they’re all quite alike, except for a few minor differences.
Type 1: Online Payday Loan
As the name suggests, an online payday loan is to be applied for online, however, you must have a steady income to be eligible for this type of loan. An online payday loan offers an amount of 100$ up to 1000$ that must be repaid on your next pay day in a couple of weeks.
Type 2: No fax Payday Loan
A no fax payday loan differs from an online payday loan in the sense that it does require you to fax your financial documents to the lender. You can receive an amount of 100$ to up to 1000$, but that may differ or exceed depending upon your income.
Type 3: Instant Payday Loan
According to the name, it is a fast loan that may get approved by the lender as soon as you walk into the store, however, you’re required to confirm the loan via phone call or text message. Upon confirmation, the loan is transferred into you account, and you’re able to withdraw it on the next business day.
Type 4: Bad Credit payday Loan
A bad credit payday loan does not require your financial history or a steady income to be approved by the lender.
Type 5: Military payday Loans
A military payday loan is provided to army personnel, however, they may face higher penalty in case they’re unable to repay the loan.
An Overview of Best Payday Lenders
Here’s a quick review of the best lenders available out there is US.
[table id=6 /]