Payday Loan Advantages

April 3, 2008 – 6:56 pm

by Ethan Hunter

In the past few years, advertisements for payday loans are popping up everywhere - on billboards, on store signs, in newspapers, and especially online. Some payday loan companies advertise by snail mail, so you may even seen some ads in your own mailbox. There are some Payday Loan Advantages though.

Sometimes they’re called cash advances, payday advances, check loans, or even post-dated check loans, but all of those terms mean essentially the same thing - a loan to carry you over until your next payday. While you’ve seen the ads, you may not know what Payday Loan Advantages are, how they work, or how to go about obtaining one.

A payday loan is a short-term loan, usually for 14-30 days, that is paid back by agreeing to an electronic withdrawal to be deducted from the borrower’s bank account on their next payday or by giving them a post-dated check. Borrowers may be getting a loan for of anywhere between $100 and $1,500, depending on the borrower’s income and the lender’s policies. Just like every other kind of loan, there is good and bad things with this type of loan.

Payday loans have a plus side, they are easy to get and easy to apply for. You will be asked to fill out a short application that includes telephone number, monthly income, where you work, and your home address. You will also provide information about your bank account, including the name of your bank and your account number. In general, the application is much simpler than those required by traditional banks, and less verification is required.

Borrowers are asked to have their latest bank statement, a fresh pay stub, and a copy of their driver’s license. There is no credit check involved, which shortens the time frame considerably. In all the process takes a total of just a few minutes, instead of days or weeks, and can be approved immediately, resulting in the borrower given a cash loan in approximately half an hour. Once approved, the borrower writes a post-dated check for the date of their next payday, and for the amount borrowed, plus the lender’s fees.

If you need the cash quicker and easier then you may want to apply for a payday loan from an Internet lender. You will provide your bank account number and the loan money is direct deposited into the your account, oftentimes within a matter of hours. Repayment arrangements vary and some companies give the you an option to roll the loan over by paying an additional loan fee. Repayment is made the same way, by direct withdrawal from the your bank account, for the amount and on the date specified in the loan agreement. You will, therefore, have the option of paying off the entire loan on the original date agreed, or of paying additional fees to extend all or part of the actual loan to a later date.

Payday loans are available to people who are working, whether or not they have good credit or are current with all their monthly obligations. Another major Payday Loan Advantages are that there is no collateral required and no credit checks involved. A person can qualify for a payday loan even without owning a home or a car, or any other form of valuables.

Payday loans can be especially valuable in an emergency situation. Maybe your car breaks down or you have an urgent medical need and the unexpected costs were not anticipated in your monthly budget. Nearly everyone finds themselves in an occasional situation where they absolutely need some extra cash and don’t have savings or other resources to tide them over. In those cases, a payday loan can be a lifesaver.

There are literally hundreds of websites dedicated to either making payday loans or to helping the consumer locate the best lenders. So, payday loans are vary easy to find. Without ever leaving the comfort of their own home, you can find the particular loan that best fits your needs,.

Of course there Is a downside. As with any type of borrowing and lending, there are disadvantages to payday loans. Most payday loan companies offer flat fees that are based on the amount borrowed and the amount of time until it is paid back in full. For example, they cost more than traditional loans because lenders are allowed to charge higher loan fees or finance charges, for short-term, unsecured loans.

For example, some lenders charge a flat fee of $15 per $100 borrowed, which doesn’t seem like much at first glance. However, a $15 fee per $100, when examined on an annualized basis, amounts to an annual percentage rate (APR) of 391%. In fact, the average APR for payday loans has been estimated at 450%.

In addition, more fees come into play if the borrower needs to roll the loan over. If, for instance, the loan were rolled over three times it would cost an extra $15 each time, in addition to the original $15. In that case, the original $100 loan could cost the borrower as much as $60.

If you are going to apply for a payday loan, it is important make sure you understand all of the fees involved, to shop around, and make sure you borrow only enough that you can pay it off in full by your next pay check.

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