Most of us at one point or another get into situations where we face financial distress. While some of us might be lucky to have adequate savings to bank upon, most of us survive hand to mouth and are not able to save money for such day. Thus they look upon getting quick cash and follow simple processes to procure the same and here comes such loans. The promise to pay back the loan amount with charges as and on the next pay check date forms its very foundation. Thus Payday loans in British Columbia have grown and has conquered a substantial market share.
The cost of borrowing such loans is significantly high. Annual percentage rate usually hovers above 300% APR in all cases. The typical financial charge is $30 per $100 borrowed for 2-3 weeks. So in case a person borrows $300, the total outflow by the end of the month is $390, which is a whopping 780% APR.
An applicant is considered to be qualifying for payday loans when he is able to fulfil the basic criteria. Some of the points which an applicant needs to accomplish are
– Applicant must be a legal resident of the United States and should have an authorized residence proof.
– Applicant should be in a legitimate job with a fixed monthly remuneration. This forms the basis of payday loans as it is not offered to the unemployed.
– Applicant should have a running bank account. For repayment purposes, applicant is required to provide a postdated check or a debit authorization to the lender for the purpose of recovering the entire sum of money on contract maturity.
– Applicant must be above the legal age of 18 (can vary as per state regulations) and must have been working with the same employer for a minimum of 90 days.
The loan granting process begins with the applicant submitting an online application or visiting a store. A basic form along with basic documentation, banking details and employment proofs are the things he is required to complete. Post this, the lender does a credit check of the applicant in order to confirm the he is not a bankrupt or a defaulter from any other organization. It forms an important aspect while judging the eligibility and credit worthiness of the applicant. If all such investigations comes to be positive, the applicant is granted a payday loan. For a first time borrower, the amount approved is not very high so as to minimize the risk and understand the repayment behavior. Someone who has borrowed before and repaid successfully is usually granted a higher amount.
An applicant should make sure about the identity of the lending company. It is important to evaluate multiple options and not just consider the cheapest option, but to look for a reputed company. The website security of this company must be robust to prevent the safety of financial data. Picking up a good lender that too in the time of crisis is even more important.
Generally the payday lenders are flexible enough in case a borrower requires some additional help. They are considerate enough to renew your contract or extend the repayment term etc. in case the applicant is finding money management difficult. It is beneficial to them as same loan will now earn a higher interest for increased term, but the financial stress on the borrower reduces marginally as well.
On the contrary, Payday loans have a very high interest rate. A borrower should do his homework thoroughly to understand his entire financial inflows and outflows before coming down and applying for it. It can let the applicant fall into a debt trap as after the loan repayment is done, the money becomes short for managing obligations of the next month. This prompts the person to go for another loan and thus trapping him in a chain of borrowing and repaying. Hence a careful and calculated decision is a must before embarking on this borrowing journey.