The statistics first:
According to an eye popping statistics by the Federal Reserve, almost half the population of the US and other developing countries live from paycheck to paycheck! What this statistics really means that in a society where the standard of living is quite high, this can come as a surprise and a shock.
What happens in an emergency?
When a person is living from a paycheck to another, it is obviously given that he does not or cannot due to pressing circumstances make any savings at all. And in all probability, he has spent most of his income in providing for himself. In a society where saving money is regarded as a virtue and where everyone starting from the layman on the street to the financial know-alls stressing on the importance of saving for a rainy day can be hilariously contradictory!
The case for a payday loan:
A payday loan can come to your rescue in situations that demand that you have ready cash in your account. It can be anything. Your car breaks down in the middle of the month or you have important house repairs to make before the next season sets in, anything!
What is a payday loan?
A payday loan is typically a loan that is borrowed for shorter periods and the primary aim is to overcome the crunch that is accompanied when your paycheck is all spent and you are still days to go before you can call the next paycheck your own. Basically, what a payday loan does is it gives you enough money to be able to tide over the days when you have no means. What are private or alternative education loans? > Consumer ...
Higher rates of interest:
It is a given thing that while payday loan are extremely convenient and easy to procure, the interest rates are quite high when compared to the traditional loans. Therefore, a word of caution is necessary to use this type of loan lest you become over confident and over spend all your money and then end up in neck deep troubles. Staying in perpetual debt situation is irksome and suffocating. Real happiness may not be in living within one’s own means but definitely better than being a constant debtor!
How to apply?
Whether you walk into the payday loans lender’s offices or you apply online, the process of acquiring a payday loan is the same basically. Some of the lenders like payday loan have physical offices as well as online application. Therefore the customer can choose whatever is convenient to hi. An online model of approving your payday loan will mean that the approved amount of loan will be credited into your bank account directly and whereas the physical approval can mean that you again have th option of picking up cash.
Does credit score count for acquiring a payday loan?
When you approach a lender for a payday loan via any one of the models that he is working with, all that he will require you to furnish will be a couple of information about you like your name and a bank account details and your employment status and the current amount of pay that you are drawing. This information is basically to gauge the repayment capacity of the borrower. What draws a lot of people towards this kind of borrowing is that while other types of loans will definitely warrant production of a favorable credit score, this can be given a miss here.
The new rules:
The Consumer Financial Protection Bureau (CFPB) in Oct 2016 has however come out with a set of regulations on payday loans where it recommends that the lenders satisfy themselves about the borrower’s capacity to repay and not default.
Factors that will determine the amount that can be borrowed:
The whole idea of a payday check is to borrow smaller amount of money for shorter time period without having o go through long processes and procedure before the loan is sanctioned. And for this reason the payday loan is also referred to as easy loans and no credit check loans as well. However, since the lenders will need to ensure that the borrower does have the capacity to repay before the loan period lapses, he may put a tab on certain level which will determine how much payday loan can be applied by the borrower. The lender can arbitrarily set a limit on the amount to be borrowed based on several factors and there can be no appeal on this kind of discretion that he enjoys.
Payday loans are only for emergencies:
Before you fall into the temptation of borrowing such loan, make sure that you are convinced that it is an emergency that you need to cover because these loans may be easy to get but the rate of interest are much higher than the other types of loans. Caution definitely necessary!
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