Sunday, July 22, 2007

Payday Loans – What You Must Know!

Sometimes when things become a little tough, we do things without too much thought. Usually because we want to put the tough thing behind us and move on. This can result in jumping in on payday loans and regretting it later. Payday loans aren't all that evil as long as you know what you're getting into and you take some time thinking about actually doing it and how you'll later terminate the loan. To begin with, payday loans aren’t always a good choice! Don’t get tricked by the ads from the mall, radio, television or Internet. Even if you desperately need some cash until your payday, you should consider all the alternatives first. In my opinion, a brief definition for payday loans is expensive cash. Payday loans are short-term cash loans. The amount of money that can be borrowed regularly ranges from $100 to $1,000, and it depends on the laws of each state. The average term is about two weeks. Payday loans are made by check cashers, finance companies, payday loan stores, and others. They are also designated as cash advance loans, check advance loans, deferred deposit check loans or post-dated check loans. This is how it usually works: the borrower writes a personal check for the sum borrowed plus a fee and he receives the amount he or she wishes minus the fee. Fees are regularly a percentage of the value of the check, but they can also be a fixed value charged per a specific amount (like $15 for each $100 borrowed). When the next payday comes, the borrower can redeem the check for cash. Otherwise, he can pay the finance charge again and roll the loan for another two weeks. To get an idea of how expensive payday loans are, you must know that this type of loan costs on average 470% APR (annual interest), while the APR a credit card is rarely higher than 60%. Let’s assume you want to make a payday loan for the amount of $300, the loan fee is of $17.50 per $100, and the loan term is 14 days. Therefore, in order to redeem the check you have to pay $352.50 when the 14 day period is over. You can pay it by cash or you can allow the check to be deposited at the back. If you still don’t have this money, you must pay the fee of $52.50 to renew the loan for another loan period. This means that borrowing $300 for a month will cost you $105. That’s not cheap at all! By comparison, a $300 cash advance on an average credit card, repaid in one month, would not cost you more than $15. All you need to get a payday loan is an open bank account and a steady source of income. However, lenders are not necessarily interested to find out if the borrower can afford to repay the loan. If you don’t pay the loan, it becomes an uncovered check in your bank account. If you fail to repay it, you will get a bounced check fee from the lender and from the bank. You will receive negative ratings on specialized databases and because of this you might lose your bank account and have difficulty in opening a new one. Because of the very high cost to borrow and the short repayment terms, the consumers sometimes tend to be trapped in repeat borrowing cycles. Reports show that almost 60% of all loans made every day are either loan renewals, or loans taken out by the same consumer immediately after paying off the last one. Payday loans with three-digit interest rate are prohibited in twelve states in the USA, where they are considered to be small loans or usury caps. The internet payday lending has become very popular lately. You can apply online and loans are directly deposited into your bank account. When the payday comes, the amount of money you’ve borrowed is electronically withdrawn. If you choose to renew the payday loan, the finance charge is electronically withdrawn from your account. Here is a suggestion in order to avoid getting a payday loan. First of all, shop carefully! If you really need that money, try to get an advance on pay from your employer or borrow the money from family or friends, at least you can do this for free (usually). Figure your daily and monthly expenditures, and try to avoid unnecessary purchases. You should also build some saving, so that there will be no need to borrow money for unexpected expenses or emergencies. If you still decide you want to use a payday loan, make sure you don’t borrow more than you can pay with your next paycheck.
About The Author
Bill Darken - He supplies highly informative eye opening articles and up-to-date loans news as well. You can see it here at loans or if the previous link is not working, you can paste this link in your browser -

No Faxing Payday Loan – Emergency Cash in 24 Hours

A payday loan is made even more convenient with the no faxing feature that lenders offer. As the term suggests, the borrower will not be required to fax documents and requirements in order for the loan application to be processed. This is most welcome for many borrowers who are not quite comfortable in divulging too much personal information or are not ready to provide the documentary requirements. It can be a tedious task to bring or send a bunch of documents such as bank statements, phone bills, pay stubs and more. No faxing payday loan does away with the hassle of paperwork, faxing and waiting in line. The borrower would only be required to fill out a secure online application application and the cash that is needed may be provided by the next business day. However, in cases where the lender is unable to verify application information or when required by law, documentation may still be necessary. Borrowers should not be careless in shopping for a payday loan just like in traditional lending. It would not be wise to apply at every online payday loan website ( or store driven by. This is because credit scores tend to go lower as more applications are filled out. The absence of a direct deposit paycheck may present some problems. Most payday loan providers find paper checks too risky. Lenders also seldom grant loans to persons with no checking accounts. The monthly income will also be considered first as a minimum requirement and in the calculation of the loanable amount. The no faxing payday loan( can help whenever an immediate or urgent need arises. Reputable lenders charge competitive fees that are in compliance with applicable laws. The services offered by some lenders can be very impressive as borrowers go through a quick and easy process. Many people are facing a financial crisis in their lives. It may be caused by personal or family illness, unpaid bills or unchecked overspending. Situations can be very overwhelming but need not go from bad to worse. With a strong resolution and action to overcome the crisis, the no faxing payday loan can provide the necessary push with the least of stress. Creditors can be managed as long as they are directly dealt with. Waiting until such time when accounts have already been turned over to a debt collector may be too late. When this point has been reached, it is a sign that creditors have given up which could make the situation worse for the borrower.
About The Author
David Steve has been associated with Payday Loans UK ( After completing his Masters in Finance, he is providing his useful advice through his articles on finance for the residents of the UK.