Quick run on the payday loans
Recent surveys and statistics across the United States have shown a growing number of people applying for payday loans. It is important to understand the complete cycle of payday loans and its mechanism before considering such an option in any time of financial distress.
This kind of short term loan usually carries a term of 2 – 3 weeks i.e. up to the next pay check date. It is also known as cash advance loan, fast loan. Salary advance loans etc. Payday loans in Quebec have lately become quite popular with the masses.
It is understandable to see a financial difficult phase at any point or other. Such obstacles often asks for an immediate cash supply and overcome it. If this happens in the middle of the month, it becomes equally difficult to arrange for immediate cash and douse the urgency for such situation. Hence the individual looks towards getting a payday loan in this time because of its quick money arrangement with least paperwork. There is no harm with borrowing such type of money a few times. The problem begins to surface when a person starts to rely on this type of loan and is consistently borrowing money to pay off other loans. This calls for a high interest payments as per the time period and money so borrowed. All of this must be considered before moving ahead with the application.
The payday companies look for certain criteria before considering the application for a payday loan. Some of it is as follows-
- The applicant must be over the age of 18 years at the time of putting his loan application
- The applicant must be in a legal job with more than 90 days of employment with the same employer.
- The applicant must be a legal resident of the United States and possess a documentary proof for such address.
- The applicant must not be a declared bankrupt or a defaulter with an existing creditor.
- The applicant must be earning over $1000 monthly and receive it with a regular frequency.
With the convenience of applying this loan online, an applicant can submit all his details over the net for the loan application. Some of the lenders do have physical stores wherein he can simply walk in and apply in person.
Once the application is processed, the loan amount is usually disbursed by the same or next day. Generally the borrower is required to provide a postdated check for the loan amount along with the interest which is banked by the customer on the next pay date. Some states also allow the lenders to obtain a direct debit mandate so they can debit the borrowers account directly using an ACH.
One of the major drawback of a payday loan is having a very high APR. Typically a $100 loan carries $15 interest amount for two weeks. However, the criminal code of Canada has prohibited charging any rate of interest on payday loans in Quebec over 30%. This effectively has been carried out to limit the payday lenders and prevent people from any unnecessary exploitation.
Payday lenders also do not shy away from charging additional interest in the situation where the customer is requesting for a loan extension or facing a situation of delayed payment. Some of the lenders report such poor repayment behavior to the credit rating agencies which makes it difficult for the borrowers to take a loan again in the future. In the light of all this, it is important for a borrower to understand the need and take a balanced decision of applying this payday loan.
There can be some alternatives which a borrower can look forward to when in need of funds. Some of it can be:
- Borrowing money from friends and family. It will serve the dual purpose of quick money and the arrangement shall be on the convenient terms. Any considerations over the loan deal can be worked out mutually.
- Trying out for the loan at a formal bank or a credit union. These institutions charge far less rate of interest and are easy to pay off.
- Cutting on expenditures and trying to defer the not so important monetary needs