What Is A Payday Loan And What Are The Advantages And Disadvantages
A payday loan is a short term loan which is provided in return for a post-dated cheque. The post dated cheque would be made payable on the date of your next pay day or maybe the following one. You can either arrange to pay the loan off in full before the due date on the cheque or alternatively allow the cheque to be presented. A payday loan really is an emergency loan when you just do not have the funds to make it through until your next payday. Very often it is some emergency that just has to be paid, example a new heating boiler.
There are some obvious benefits of using a Payday loan in this manner, particularly if you consider the alternatives.
1. - There are fees for a payday loan but costs are probably less than the additional bank charges incurred for exceeding an overdraft limit or the cost of exceeding the credit limit on a credit card or incurring late payment penalty charges.
2. - Payday loans don't affect your credit status because the companies that provide payday loans don't report the information through the channels as other conventional lenders would.
3. - Payday loans are usually granted within minutes and the funds transferred to your bank account. Conventional loans or a special arrangement with your bank would normally take a few days.
Payday loans have been subject to regulation in many countries and without being too specific you should ensure you are in contact with a company approved by the regulators. We all appreciate you are only going to contact a payday loan provider in case of an emergency but the rules are in place in an attempt to prevent people getting into too much trouble. The value of the loan is related to your normal earnings so it should not be easy to borrow way over what you can afford to pay back.
The Obvious Disadvantage of using a payday loan is the cost in percentage terms. If for example your borrowed £200 (or $s) and had to pay back £250 (or $s) in 15 to 30 days time then £50 to get yourself out of real trouble might be money well spent but it represents a huge percentage cost of you could fund the emergency elsewhere.
There are a range of regulations applicable to different countries and states on how payday lenders should behave and what they can and can not do. These regulations vary considerably and payday loans are illegal in some states or countries. How the payday lenders can go about collecting their money if you fall behind with a payment again varies considerably.
Finally a few warning notes:
1. - Please ensure that you read any paperwork or terms and conditions associated with a loan before you make the commitment.
2. - Take time to understand exactly what the loan will cost you if you repay when you anticipate and consider what happens if you get into difficulty. It is critical that you meet your commitments or you could soon face some very large debts.
3. - Do NOT get trapped into a rolling over situation where you are continually getting a new payday loan. The term rolling over is outlawed in several places in the world. Understand your legal rights.
If you do wish to secure a payday loan then you can either contact a local office, if you know of one, or complete an inquiry on-line via the web. A quick search on the web will provide you with a number of alternatives. You should be required to evidence your recent payslip or payslips and these would probably require you access to a fax machine.