Understanding how payday loans work can help you handle urgent financial problems with ease
. There is no way to plan for entirely unexpected situations, such as car accidents or serious medical issues. Either of these can bring with them expensive payments that are not easy to pay off. And if you are not able to use credit cards or borrow money from someone to handle those bills, you will probably be feeling stressed out. These kinds of situations show the benefits of payday loans.
Another name for payday loans is cash advance loans; they are both issued on a short term basis to people with evidence that they receive a regular paycheck. On the borrower's next payday after having received a loan, they have to pay their principle and any applicable charges. People who do not make on time payments will have to pay penalties with lots of interest. Cash advances are available online and in local loan centers.
Lenders require several pieces of information before they will send funds to a borrower's account. A recent paystub will show the lender that you earn a regular paycheck and will be able to pay back the funds borrowed. You also need details about your bank account so that the lender can deposit your loan directly to your account. Deposits are completed 24 hours after applying for the loan or before in some cases.
If you get caught offguard by an unexpected bill, you can use payday loans to pay for it. Credit is not important for these types of loans, so lenders almost never run credit checks on potential borrowers. They use proof of employment as collateral and require that your loan be paid back on your very next payday.
You should also be conscious of the following concerns. You will be made to pay some additional fees in exchange for being able to get money so quickly. On two week loans, you should expect to pay from $15 to $25 for every $100 of your loan. That means that for you to borrow $1000 for 2 weeks, you can expect to pay up to $250. Things get worse if you need an extension, since extra fees are tacked on and you could end up owing more than half the principal of your loan just in fees and interest charges.
Payday loans are a great way to get funds quickly so you can handle unexpected expenses. Get all the benefits without the hassle by paying them back on time.