Payday Loans FAQs
Here are some frequently asked/answered questions about payday loans that help you understand them better.
What is the difference between a payday loan and other types of credit?
Payday loans or cash advance loans are small amounts ranging from $50 to 500. There are exceptions where you can get $ 1000. No credit checks are made. Bank loans and credit cards make credit checks. In payday loans you commit to repay the loan from your next paycheck whereas with other types of credit monthly payments are worked out.
Who can apply for a payday loan?
The short answer is anyone. Payday loan companies are not concerned about bad credit or past bankruptcies to approve a payday loan. You only need to have a regular job and produce proof of an active checking account. The lenders also expect you to fax these documents to them so that they can verify them. Payday loans are very easy to get, so it makes them very attractive.
What do I need when I apply for a payday loan?
You need to be over 18 years of age, have a regular job, and not be in the midst of a bankruptcy process. You are expected to produce your latest pay stub and bank statement.
Which is the best type of payday loan?
The best type of payday loan is the one that you repay the fastest as per your committed date - simply because a delay can run up huge fees that you might find difficult or almost impossible to handle.
How does the cost of a payday loan compare with conventional credit?
Short-term payday loans are costly. In the long term, payday loans are extremely expensive. Untimely repayment of your payday loans makes you incur high interest rates. A delay adds up to extra fees. Payday loans are much more expensive than credit cards or bank loans. Imagine delaying your loan for three months, if the lender allows you to, and ending up paying interest and fees that far exceed the loan amount!
Are payday loan companies regulated?
State and local laws regulate payday loan companies.
From where does the income of payday loan companies come?
Your payday loan fees or service charges paid at the time of taking a payday loan is the income of the payday loan company. When you default on repaying your loan continuously, they make a huge profit out of the sky-high charges.
Is it possible to complain about a payday loan company?
You can. You would need to have documentary evidence of all your dealings and then you can lodge a complaint.
What will happen if I don't repay the payday loan?
The payday loan company will start the process of collecting the money from you through their collections division. Repeated reminders are the order of the day.
Is it possible to shift the payday loan from one lender to another?
It is possible. It is like a rollover for which you pay extra, so you would need to think twice before you want to do it. You would also want to consider the particular State regulations. Beware of lenders who encourage you to rollover your loan - they depend on it for their profit.
What kinds of interest rates apply to payday loans?
Interest rates or APR on payday loans vary from lender to lender and borrower-to-borrower depending on the amount of loan and the length of loan period. We can summarize by saying that payday loan interest rates are extremely expensive.