What are Payday Loans?

Posted: February 14, 2012 in Personal Finance
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Payday loans are short term cash bonds on a borrower’s personal check that is held for future electronic access or deposit to the borrower’s bank account. A person usually writes a personal check for the total amount borrowed plus a finance charge and then receives the cash. Lenders usually hold the checks until payday when loans and other finance charges are paid in a single lump sum. To repay a loan, borrowers may redeem the check by paying that fast payday loan with cash, let the check be deposited in the bank or paying the finance charge to roll the loan for the next pay period.

The Payday Loan Terms

Fast payday loans range from $100 to $1000, based on state regulations for maximum amount. Average term for payday loans is about two weeks. These loans usually cost 400 percent annual interest. Finance charge runs from $15-$30 for every $100 borrowed cash. And for two week cash loans, finance charges may result in interest rates from 390-780 percent APR.

How to quality for a payday loan?

The process of acquiring a fast payday loan is pretty simple compared to other types of loans. In order for you to qualify a payday loan, you must present a valid ID with a photo and a proof of income like pay stubs and paychecks. Most lenders do not conduct credit checks for payday loans. Credit usually takes some time and payday loans are made to be fast and efficient. Since this kind of loan puts the lender at risk, interest rates tend to be higher.

If you want to avail of a fast online loan, then payday loans are a good way to go.

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