There has been increasing popularity of payday loans and the lending companies. A payday loan is usually a short term loan which usually lasts for one or two weeks. The loan is secured by the customer’s next pay check. These loans are also called as cash advance, paycheck loan, payroll advance loans or check loans. The loan is taken with an intention to repay it from the next payroll. However, the customers can rollover the amount to next cycle by paying additional fees along with the interest amounts of the principal.
Payday loans play an important role to meet some of the urgent family expenses which include utility bill payments, or for some kind of emergency which are not planned in the monthly expenses. The customers have a choice of either going for the personal loans or taking advance against their pay checks. Personal loans usually takes a day or two or sometimes a week to obtain, whereas, if the customer asks for payday loans, he receives the money on the next business day. The money is credited in the checking account of the customer with in 24 hours of applying for the loan. Apart from the time of processing, another reason why the payday loans are more popular is because of the requirements. To get a payday loans, the customers do not require giving any kind of collateral or guaranteeing; they are not required to go through any kind of credit checks, unlike in the case of personal loans. This helps the persons who have a bad credit rating or without any property to get a payday loan at the earliest.
The only requirement to obtain a payday loan is that a person is required to be currently employed in a job and must also have a checking account with a bank. The payday loans can be applied during the business hours from Monday through Friday. Some of the loan companies work for extended hours giving more flexibility to the customers. Alternatively, the payday loans can also be applied online. Some of the payday loans company often give loans within an hour if applied online (based on certain conditions). Repaying the loans is also easy – the lender would just take the amount back from the checking account of the customer on the due date.
Although payday loans offer lot of convenience to the customers, there are certain disadvantages associated with it. Normally, the interest rates of payday loans are high because of the risk involved with it. Additionally, the loan amounts are usually not high and ranges from $500 to $1,000 and sometimes, they are extended to $2,000.
Despite the knowledge of the high fees, many people prefer payday loans as they are quick to obtain and requires minimum paper work. It is a blessing in disguise for those who have a bad credit and needs money urgently. However, it is generally recommended that people need to budget the monthly expenses proportionate to the income so that they don’t fall in the trap of the payday loan companies.