One of the most popular financial products created in the last several decades is the payday loan, also known as a paycheck advance or cash advances. A payday loan is a loan that is made based on the person's salary from their job and is usually only issued for a two week period so the person will repay the loan when they receive their next paycheck. Payday loans are intended to help people without any other means of obtaining additional money take care of emergency expenses that may occur before their next scheduled pay date.
These payday loans work well for families that find themselves in situations where they need extra money immediately but do not have the additional money available in their bank account at the time, such as when they need to purchase new clothes for their growing children or they need to make an emergency repair to their home or car. There are few different routes that will enable people to get a payday loan and knowing how to get these loans can be very beneficial for the people that truly need them.
Getting A Payday Loan
Learning how to get payday advance loans does not have to be difficult. There are several different sources that will provide a small, short term payday advance that you can receive immediately. The most common source of payday loans is payday lenders. After you fill out the required application, the customer service representative will review the application, along with any accompanying documentation, and determines whether the person is eligible to receive loans through the payday lender. In many cases, these payday lenders may approve you for a payday loan within minutes of you filling out their application.
There are several pieces of documentation that may be required by the payday lender before they are authorized to extend cash advances to an individual. A valid driver's license or identification card for the state that the person is applying for the payday advance in is usually required, along with the person's most recent paycheck stubs so that the payday loan company can verify the person's income and ability to repay the loan. In some cases, the payday loan company will also require verification of the person's social security number and will verify employment with a call to the person's employer.
Finding A Payday Loan
If you are looking for a payday loan lender, they are generally very easy to find. In most mid to large sized cities, you can find a payday loan lender every few blocks, with some sporting the names of national chains. In some cases, the payday loan lender will advertise their payday loans in a brochure that shows up in the mail. These advertisements will often have a location address and phone number listed along with what information will be needed to get payday loans.
Some payday loan lenders issue their payday advances over the internet, which is considered to be very convenient for some borrowers. The person looking for the payday loan can type their information into an online form and approval can be granted or denied within a half-hour's time. Even though the person is approved instantly when using an online form to apply for a payday loan, it will still take a few days to receive the money for the loan and until the loan arrives, the person will not have access to the money that they were approved for.
Interest Rates For Payday Loans
The biggest issue associated with a payday loan is the interest rate that is charged for these short-term loans. The interest rate associated with a bank loan or credit card is between 5% and 10% annually. For people with low credit scores or a shaky credit history, the interest rate for a credit card may be as high as 30%. The interest rate charged for a two week loan from a payday loan lender averages between 300% and 800% annually.
Although the interest rate and fees charged for these payday loans may seem reasonable when a person is in financial distress and needs the money badly, over time these fees begin to add up and can sometimes trap the borrower in a cycle of debt. Because so many people seem to fall into revolving debt when they choose to obtain a cash advance from a payday lender, many legislators on the state level have attempted to enact laws that curb the interest rates and fees associated with payday loans.
Payday loans and cash advances can be a valuable financial tool when used responsibly but can have devastating consequences when used irresponsibly or too often. Payday loans should only be used when the need is dire and the person does not have any other method of solving the problem. In these cases, being able to obtain a payday loan could be a life saver.
