The Payday Loan Truth
Payday loan offers are everywhere, so what is a payday loan? And how do they work?
What is a Payday Loan?
Payday loans can be expensive, which means that people who use them should do with thoughtfulness and be able to pay the amount that they have borrowed back sooner rather than later. The term of these loans is quite short so the cost of borrowing is high. The borrower will usually provide the lender with a pre-dated check or debt authorization.
How Does it Work?
Lets say you have an unexpected emergency like your car breaks down and you need to pay for repairs and you borrow some money to pay for this from a payday lender. You will then write a post-dated personal check for the amount you borrowed plus the finance fee that is payable to the lender.
You can apply for the loan online and enter the relevant information. You will receive the money from the lender for a set amount of time. When the time is up you will pay the lender what you owe. If you do not pay the debt in full at the end of the loan term then you will be charged extra fees and finance charges.
Who Uses Payday Loans
Anyone that has a steady income and a checking account is able to get a payday loan. Generally though borrowers that do not have access to savings or credit cards will use these loans, as they do not require a credit checks.
Payday loans are good if you need to quickly and easily borrow money for an emergency if you have no other options available.
You need to pay back your payday loan as soon as possible so that you can avoid additional fees. It can become expensive when you get stuck in a payday loan cycle for a long time and can lead to larger financial problems. The interest that is also charged on a payday loan is a lot higher and can add up if you do not pay on time.