What are payday loans?
A payday loan is a type of loan that you get on contingency of receiving a paycheck. Basically, if you are short on cash and need some money to make it to your next payday, you can take out a loan and then it is generally expected that you will pay the balance owed on your payday.
What is the process of a getting payday loans?
The process is fairly simple, and it goes like this:
Step 1: Approach a lender in person, over the phone or internet and ask for a loan. A credit check is not required nor is proof of income. The lender will collect all the pertinent information and process the loan.
Step 2: Give the lender access to your bank account or a postdated check so the amount of money you borrowed can be paid back on your next payday. If the amount you need is more that what you earn the lender may set up a payment plan where you pay a certain percentage of the loan each payday.
What is the interest rate of a payday loan?
The interest rates are astronomical so use these loans with caution. The interest rates add in excess of 200% to the loans balance. Some states are pushing for regulation in the industry but the laws are too late for some people.
Are there any alternatives to a payday loan?
If you do not want to go down the road of a payday loan, you could try the following alternatives:
– Ask your boss for an advance of your paycheck. Advances are a good way to get the money you need, but if you are not on salary, it is hard to get an advance from an employer.
– Approach a charity that can help with bills. If you need the money for a power bill St Vincent De Paul pays water and power bills, so do other organizations such as the red cross.
– Approach your bank for a loan. These types of loans are good for your credit and if you have a good credit history, you may be able to get a lower interest rate.
– Apply for a credit card
– If you are in debt, consider a debt consolidation, debt management or even in the extreme you could declare bankruptcy.
If you are in desperate need, then a payday loan may be the only option you have. If you do take a loan out, please exercise caution and pay it off as soon as you can.