Advance Payday Loan
An advance payday loan is an expression used to describe a short-term cash loan intended
to help the customer financially until her or she next gets paid. Advance payday loan are not available from banks, which tend to provide only long-term financial loans for amounts in excess of $1000. An advance payday loan is usually issued for a smaller amount, typically $100-$500, though they can sometimes be for as much as $1500. The amount somebody may borrow is subject to state laws in which the payday loan company resides.
An advance payday loan might be acquired in a brick and mortar store or online from a lending Website. The process for borrowing the money is essentially identical for both types of lenders. A consumer who wants a short-term term loan goes to the lender and provides the following information:
A driver's license or other photo identification
Proof of employment, such as a paycheck stub
Proof that the customer has a checking account.
A postdated check tor the loan amount plus interest (store financial loans)
Their bank account informat (online financial loans)
Most payday loan companies don't check with the credit score bureaus to see if the consumer has a good FICO score or a favorable history of repaying loans or repaying bills. On-line lenders usually require that the documentation be submitted by FAX machine, although several loan companies publicize themselves as "no FAX" loan companies; such loan companies simply ask borrwers to fill out a form online.
In the case of a loan from a store, the lender provides the borrower the money on the spot. In two weeks' time, the borrower must return and pay back the loan. Should they not return to repay, the lender simply cashes the postdated check. With online payday loans, the Website electronically withdraws the cash from the borrower's account.
What happens with non-payment varies by state. In most of the states that permit advance payday loans, the loan may be "rolled over" or reissued for another fourteen days. The customer pays the fee a second time and payment is due in full two weeks later. Several states don't permit people to roll over their loans; these states normally give debtors a certain amount of time to repay with out extra charges.
Rates of interest tend to be high for payday loans when compared to bank loans. While there is no interest charge per se, borrowers will be charged fees for the loans in amounts that average $15 per $100 borrowed. When viewed as an annual percentage rate, these fees equate to a rate of some 390% per year. Because of these high charges, a few states prohibit cash advance loan stores, although these states have a difficult time preventing their citizens from borrowing money online.
Payday loans might be helpful for occasional money emergencies, but because of their high cost, they are not suitable for people who have long-term or recurring money problems.
Advance Payday Loan
By: Charles Essmeier
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