Paying off your bills on time is not always possible. There are times when unexpected expenses pop up and you need cash fast to cover the cost.
Getting money without having an account or credit card can be challenging, especially if you don’t have a car or access to a bank branch. In such situations, you may consider using a payday loan. They allow you to get quick cash by offering short-term loans in exchange for a fee charged at a high rate of interest. However, despite their reputation as expensive, they are actually a good option for emergency cash because the process is simple and easy to complete. To learn more about how these loans work and why people find them useful, keep reading!
What Is a Payday Loan?
A payday loan is a small unsecured loan that allows borrowers to borrow between $100 and $1500 with no collateral required. The borrower receives cash quickly, typically within two weeks of applying, but there are several requirements that must be met before accepting one of these loans. The most important requirement is that the borrower has earned enough income to cover his/her payments for at least two months. Additionally, it is necessary to show proof of employment or a steady source of income (like a pension).
Since many payday lenders offer “no faxing” policies, all documents must be sent electronically to avoid delays. If the borrower fails to meet any of the stated requirements, the lender will not approve the application. This policy helps prevent over-borrowing since the borrower could easily fail to repay the loan and incur additional fees.
The interest rates are usually higher than those offered by banks or credit unions, but this comes with the advantage of getting paid faster. Interest accumulates daily and is charged at the end of each month. In addition, payday loans are not included in many types of financial plans, so they are often difficult to pay back. Because they provide little security, it is important that borrowers understand that they may never get their funds back in full.
Even though they are considered small amounts, payday loans carry significant costs. For example, some lenders charge around 100% per day, which translates into thousands of dollars in interest charges. Since the average length of a payday loan is 14 days, this can add up pretty quickly. Most consumers are only able to borrow a few hundred dollars, but larger loans require even more money upfront. Furthermore, payday lenders often include fees for processing paperwork and sending documents through the mail. These costs can add another $10-$15 to the total amount that must be repaid.
Despite the high price tag, many individuals find that these loans are worth paying. Some people use them as a last resort when other options aren’t available. Others prefer them because they provide the opportunity to get the money they need quickly, while still avoiding the added stress of waiting for approval from a bank.
Mostly the situation of the payday loan arises when a person do not have the sufficient funds to meet their daily requirement. First of all a person can make the analysis of the expenses with the help of the application like Money-Wise. After this they can arrange the funds and satisfy their needs in easy manner.
How Do Payday Loans Work?
If you want to apply for a payday loan, you must fill out an online form provided by the lender. You’ll also need to send any required documentation and payment via email, fax, or mail. Once you submit the application, the lender reviews it and decides whether to grant you a loan. This step takes approximately five minutes to complete, and your application will be approved or denied immediately after submission. If you do not qualify for the loan, the lender will let you know within 24 hours.
Typically, the lender sends a check made payable to you for the amount due plus a service fee. When you receive the check, sign it and return it to the lender as soon as possible. Don’t deposit the check until the lender approves it, and make sure you write the date down clearly.
Once the lender accepts the checks, it deposits the funds into your bank account. Your check should arrive within two to three business days. Even if you do not have direct deposit set up, your bank will notify you once the funds are available in your account.
If you choose to take out a loan with a different lender, you can expect to wait anywhere from four to seven business days for the funds to be deposited into your account. It can take longer during weekends or holidays, so plan ahead to ensure that you do not miss your next paycheck.
Can I Receive My Money Back?
Yes, if you decide to cancel your payday loan before the expiration date. You can stop payments anytime by calling customer care or logging onto the company website. Canceling early requires a minimum of 10 days notice; however, most lenders will give you 15 days notice, allowing you to cancel your loan sooner.
To get your money back, go to the same page where you filled out the application. On the left side of the screen, click “My Account” and then select “Cancel Loan.” Enter your username and password, and confirm your request.
Do I Need Proof of Identification to Get a Payday Loan?
No, although most payday lenders require that you provide identification. In most cases, you will just need to present your driver’s license or passport number. You might also be asked for additional information, like proof of employment or Social Security number.
However, there are situations when additional documentation is required. For example, if you are applying for a loan in order to buy a vehicle or make other major purchases, you may need to provide additional proof of identity or employment. For this reason, it is best to ask your lender what specific documentation is needed based on your circumstances.
Are Payday Loans Legal?
As mentioned above, payday loans are a type of unsecured loan. As long as you meet certain requirements, you can apply for one legally. However, since they are considered small amounts, federal laws limit the interest rates and maximum amounts that can be borrowed. Additionally, states regulate payday lending, so the rules and regulations vary depending on where you live.