What Is Payday Loans? What You Need To Know?
According to the latest survey conducted by US Census Bureau, millions of Americans are living there in poverty.
Smith, 35 years old living in Utah, makes approx. $45000 a year, but still struggled to afford their basic needs, like a place to live, college fees, etc. Smith stated that “many times he runs out of money before his next payday and he is simply forced to do an odd job for money”. Here’s look at Payday loans direct lenders to borrow some cash, without spending much time and affords.
What Are Payday Loans?
Payday loans are short term and unsecured loans and designed to offer a small number of dollars. Generally, the borrower needs to submit an online application form for the amount, which they wish to borrow. Such short term payday loans are very helpful to cope with small and unexpected expenses.
If you have ever applied for a bank loan, you definitely know the loan process of the bank, and what documents they want before approving a loan. Totally opposite with payday loans, you just need to have your current income, and employment proof, and valid identification to get loan approval.
According to Consumerist, there are lots of online payday loans direct lenders and storefronts in the USA, more than McDonald’s food outlets.
How Does Payday Loans Work?
Payday loans work in a different way from another type of loan. Depending on the location where you live, you can get payday loans online or by directly visiting the payday loans storefront. All states law related to a payday loan is different. How much you borrow, and how much interest your lender charged including fees on your loan is depends upon state law. Even some states in the USA prohibit the functioning of payday loans.
Once your payday loans are approved, you will get cash directly into your bank account, or by check. You will have to pay back your loan money in full on your due date, which will be mostly on your next payday. Due to its easy availability, the APR of payday loans is usually higher.
Despite payday loans higher cost, according to The Economist, 2.5 million Americans still run their household’s needs by taking payday loans each year. The main reason for the vast popularity of short term payday loans is because people do not have another source of financing. Most of the Americans are living with their poor credit or no income, which becomes a blockage for them to get other personal loans with good terms.
On the other hand, payday loans have very few requirements and offer approval in minutes. Most of the lenders now provide payday loans with no credit check, in which borrowers must have the ability to repay their loans on time.
Who Uses Payday Loans The Most?
Famously known Pew Charitable Trust released their detail report on payday loans, which stated that 12 million Americans use payday loans and borrow approx. $7 billion each year. Most of the frequent borrowers of payday loans are white females aged between 25-44 years. Pew Charitable divided the payday loans, borrowers, into five groups, borrowers with no four-year college degree; living in the rented home; African Americans; separated or divorced; those whose earning below $40,000/year.
Pros and Cons of Payday Loans
If you are ready to choose payday loans for your cash needs, please read the below payday loans pros and cons:
- Easy to qualify: One of the most favorable points of payday loans is that it is easy to get approve even with less credit scores.
- Speedy process: Usually, the application process is straightforward, and you can quickly access your desire money.
- Borrow enough money: At the time of emergency, you can get enough money from $100-$5000 within few minutes.
- Bad credit OK! Payday loans are available at minimum requirements and verification, and most of the payday lenders accept BAD CREDIT!
- High interest: Payday loans are convenient, but generally come with high interest rate and cost.
- Late fees: Payday loans lenders quickly charge late fees if you don’t have enough money to repay on due date.
- Might causing debt cycle: If you do not have money to repay your payday loans, you might try to take another payday loans to cover first one. This step leads you to indulge into never ending deadly debt trap.
- Good for short term: Payday loans are only good for short term requirements of money and not recommended for long term money goals.
Alternatives to Payday Loans
Payday loans might be a good source of borrows’ urgent money, but it is neglected due to its high cost and fear of the debt cycle. Before you finally take out payday loans, consider some alternative to payday loans below:
As compare to payday loans, credit cards come with a low-interest rate, and if you make regular repayments on time then there is no interest applied. Though this is applied for general shopping and spending, having use of your credit card for other purposes may charges and extra fees. If you have bad credit or no credit, don’t worry! Still, some credit cards are designed and approved for the people to restore their credit score.
Family and Friends
Beside from banks and other financial institutions, you might consider borrowing money from your family members or friends. In this way, you can easily avoid payday loans, but you have to consider some following points:
- Make a clear loan agreement in writing with signatures for validation of deal.
- For a fair deal, always make a repayment plan and stick to it.
- Always make a pre-plan in the case of late or miss-payments.
- Cutting back other costs.
- Selling something you own (old stuff).
- Speak to your existing lender and try to make a favorable repayment plan.
- Do part-time jobs to earn extra money.
Applying for payday loans online is free, and it won’t affect your credit score. Please note down that we’re not a lender, we just match your loan request with a range of top most payday loans direct lender in the USA. You can also directly apply for payday loans Arizona at low interest rate and free of extra charges.