Fast money, payday loans, speedy loans online. Most likely, you have heard about them but did not fully understand how they work. Someone says that this is a scam. And for many people, payday loans are the only way to survive.
What are payday loans?
Payday loans are a common practice around the world. They are offered both in developed and third world countries.
A payday loan is a loan provided by a lender to a borrower on the terms stipulated by the loan agreement, in an amount not exceeding the maximum amount of the borrower’s obligations to the lender on the principal debt established by this law.
Now in simple words. A payday loan is the same loan, only the money is not given to you by the bank and you can get no more than $5,000. Most often these are not small sums.
A payday loan looks something like this:
- Short term – up to 30 days;
- A small amount – on average not exceeding $5,000;
- Daily interest – usually 1–2%.
- Fast approval – usually 15 minutes;
- Documents –state-issued ID, driver’s license, and SNN.
Usually, the loan is repaid the day you get your next paycheck. The requested money is transferred to your bank account the same day or the next day.
You don’t have to provide a lot of documents. There is no need to indicate the purpose of the loan. Moreover: payday loans online are given even to borrowers with bad credit history.
How do online loans work?
After receiving the online application, the lender checks the age and registration of the borrower using the borrower’s government-issued ID. If the person is an adult citizen of the United States who has no official debts, then, most likely, he or she will receive a payday loan.
It’s not easy to fool a lender. Companies have security services that study a potential client in a matter of minutes: they check for convictions, debts in other financial institutions, and other data. Some even check their credit history.
Features of payday loans
There are three things that you should know before getting a payday loan online.
1. Consider the difference between organizations. Not every organization can lend enough money.
2. Read the rules. Before concluding a deal, the company should let you review the loan terms and rates. The document should contain the following items:
- The procedure for applying for a loan;
- The order of application consideration;
- Procedure for concluding a loan agreement;
- The procedure for providing you with a payment schedule;
- Other internal conditions of the company not related to the contract.
3. Think about a purpose loan. A purpose loan is a money that you have to spend on a specific thing or service. In theory, a lender can give you such a loan but they can control how you spend the funds received. And you will be obliged to provide the lender with the ability to control.
How to repay a loan correctly?
Lenders love clients who return the money on time. If the first loan is repaid on time, organizations trust you more and increase the credit limit.
If you do not have time to return the money in time, you can extend the loan agreement. Accordingly, interest will have to be paid all this time. Typically, the more days you renew the contract, the higher the daily interest rate. Sometimes it reaches 57% of the loan amount for each day. And if you do not pay during this time, then you will get a fine for every day that is overdue.
In a couple of days, the lender will contact the collectors, and if they do not help to collect the debt, there will be a court. Since the lenders are operating legally, the court decision will not be in your favor. It is important to understand: you cannot fail to return the money.
But don’t be alarmed. There are strong companies that are not afraid of the loan extension. When contacting such lenders, the loan interest will remain at the same level.
Conclusions
- Payday loan amounts usually do not exceed $5,000;
- Terms usually do not exceed 4 weeks;
- You can apply for a loan online;
- The average time for consideration of a loan application is 15 minutes;
- Lenders send money to the borrower’s account within 24 hours;
- Payday loans must be repaid on time. Otherwise, you get a penalty;
- To get a payday loan, you need to be at least 18 years and be a legal U.S. resident.
Interesting facts
- There are about 400 microfinance institutions in the USA, 150 are online lenders;
- Not all states are licensed to operate microfinance organizations;
- The total cost of the loan depends on the state in which the borrower lives and is calculated individually, according to state law;
- In the event of a loan delay, interest is charged at double the daily interest rate;
- The borrower can provide the lender with remote access to its bank account;
- Lenders have the right to transfer debt collection to a collection company.
Category: Online Loans
Tags: funding issue, loans, money, payday loans