A short term loan, often referred to as a payday loan is a short term unsecured loan. Many areas refer to them as cash advances however, the term is often confused with short term lines of credit provided by banks. Two things are required in order to apply for a payday loan that is employment or a verifiable source of income and documentation to prove how much you make.
The annual percentage rates for this type of loan can verify greatly between lenders. Many countries have recently passed legislation to limit the APR on payday loans.
A payday loan is repaid on the next payday for the borrower. Once the income is verified and the application is processed the borrower can receive their money the same day or the next business day.
With today’s technology going to the actual location of a payday lender is a thing of the past. You can now apply for a payday loan online. All you need to do is either email or fax documentation that proves you have a job, how much you make, proof of residency, and a voided check as proof you have a checking account. Once your loan is approved it is deposited directly into your checking account as early as the same day or next business day. On the next payday the amount plus any fees are withdrawn from your checking account and the loan is repaid.
A payday loan can be a great way to help out when unexpected circumstances arise. These can be anywhere from an emergency medical bill to emergency maintenance on the family vehicle. They can also be a good way to reestablish credit. Many payday lenders report the payments directly to a credit agency. While you should never consider getting a payday loan just to improve your credit score it’s a fact to keep in mind should you need to apply for one.
As with any type of loan there are payments that need to be made to pay back the loan. These types of loans have very high interest rates that are added into the payment. Before applying for a payday loan be sure your budget can accommodate the extra payment. If you find yourself applying for too many payday loans you may want to take another look at your finances for ways to cut back thus having more cash available. Because as with any loan, you obviously do have to pay it back eventually, and the sooner the better.