The Ins & Outs of Payday Loans
Salary or payroll loan, small dollar, short term or cash advance loan – these are just some of the most common names given to payday loans. Payday loans are short-term, unsecured loans or cash advances against a borrower’s employment salary or other source of income.
Strapped for cash? Need just enough but not too much to get you to your next payday? Maybe you’ve been hit with an unplanned for expense, a car repair or unforeseen household emergency, and you need a quick financial fix but haven’t the time or the patience for what is sure to be a lengthy and tiresome loan application process carried out by a conventional lending institution such as a bank. Or, maybe your credit rating isn’t what it used to be. Well, in all these instances, a payday loan may be the just solution you’re looking for.
But before you take out that payday loan, there are both pros and cons that you need to be aware of. Payday loans can be useful in certain financial circumstances, sure, but they can bite you in the pocket book if you’re not careful. A payday loan is not something to take lightly, and certainly not something to be used indiscriminately.
The Upside to Payday Loans
There’s some pretty good news here for those of you thinking of taking out a payday loan. For one thing, payday loans are easy to get. Even the application process is quick and easy. Most lenders offer the option of applying online or in person and approvals can be very quick, indeed – hours, sometimes minutes, almost always the same business day.
The personal details needed to make an application are pretty basic: personal ID, proof of an active bank account and a legitimate, steady source of income. Lenders, generally, accept not only earnings from traditional employment, but self-employment earnings and other income sources such as benefits, pensions, etc.
If applying in person, you’ll need to have the relevant documentation – driver’s license, bank statement, etc. – with you. Applying online, you may be required to fax documentation but many lenders don’t even require this. The whole process is designed to make applying for a loan as borrower-friendly as possible.
And, believe it or not, your credit rating won’t come between you and that payday loan. Normally, lenders do not perform standard credit checks when processing applications for a payday loan. This is because payday loans are, essentially, cash advances against an employment salary or other form of income. As long as you have proof of income, Bob’s your uncle.
Some lenders will, however, look for irresponsible past use of payday loans. If you have a history of delinquent payday loans or debts with your bank, your application could be denied but, because credit ratings aren’t normally factored into the application process, most are approved.
Once your application is approved and you’ve accepted the terms of the loan – the amount to be borrowed, fees, interest rate, repayment schedule, etc. – the lender will usually wire the money to your bank account either that same day or the following business day. If you’re applying in person, you may even walk away with cash in hand.