What are Payday Loans?
A payday loan is a short-term cash advance that can be obtained from a payday loan store or from an online payday lender. Unlike traditional loans, where you have to stand for long hours in serpentine queues and submit loads of documents, a payday loan is hassle-free and fast way to get emergency cash.
The borrower can borrow an amount ranging from $100 to $1000, though not all lenders give a loan of $1000. Even people with poor credit can apply for a payday loan. The payday loan has to be paid back on your next payday or within 30 days of taking the loan, depending on lender's policy.
Known By Different Names
Payday loan is called by different names such as cash advance, payday advance, paycheck advance, short-term cash loan. These different payday loans have different advantages and at times different criteria as well. Hence, do ample research to find a payday loan that suits your needs.
Criteria for getting a Payday Loan
As a borrower, you must meet certain criteria to be eligible to apply for a payday cash loan. You may qualify for a loan if you:
- Have a job or receive regular income.
- Earn at least $800 per month.
- Are a U.S. resident at least 18 years old.
- Have a bank account in good standing.
Using Payday Loans
Once you meet the criteria, the loan amount is electronically transferred to your bank account. The lender takes a post-dated check or a mandate for direct debit from you as an assurance used to withdraw the principal amount and the interest fee on your next payday.
You can use the payday loan to meet your urgent needs like car repair bills, household bills, medical bills, grocery bills and the like.
However, it is advisable pay back on time as the APR of these loans can be as high as 400%. Besides, the interest rates fluctuate from time to time. Hence, before you apply for a payday loan it is advisable to do some comparison-shopping and find a reliable online lender that offers a payday loan at a competitive interest rate or fee.