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Detailed Guide to Payday Loans from the Professor of Economy

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How to Get a Loan Fast Online

  • Check the requirements and pre-qualify online
    Step 1
  • Decide on the loan amount and check your rates
    Step 2
  • Complete the application form
    Step 3
  • Get instant approval decision
    Step 4
  • Receive the loan on your bank account
    Step 5

The Community Financial Services Association of America states that there are 18,600 payday loan points across the country. Almost 19 million families received $38.5 billion in advance. The fact, that the process of getting a cash advance is simple and quick, makes payday loans attractive to many applicants, especially those who have little or no access to conventional loans.

A person may need quick loans online for several reasons. An urgent medical bill or repair of the car, unexpected home improvement or vacation. When an emergency to pay for unexpected bills occurs, an online payday loan is at your disposal to get the advance you need, as quick as possible. The money is usually transferred into your bank account within 1 business day, which makes the process of receiving a payday advance fast and easy.

How Online Payday Loans Work

Nowadays, most processes are run via Internet. It is very convenient to apply for a payday loan online. However, choosing the best option of payday loan online isn’t easy. All online lenders differ and some of them demand extremely high interest rates, especially for those borrowers who have bad or no credit history.

A payday loan usually must be refunded by your next payday. Generally, this process takes from two weeks to a month. If it happens that you don’t manage to refinance the loan in full plus fees by the due date, the lender has the legal right to realize the check or electronically debit a borrower’s bank account.

Every state, that allows payday loans, set a limit on the loan sum and related fees. Depending on the state, financial organizations are allowed to charge fees from $10 to $30 for every $100 borrowed.

What is a payday loan?

A payday loan has different names — cash advance loans, deferred deposit loans, check advance loans or payday loans online — however, all of them work in the same way.

Payday Loan is a short-time credit that is used to cover small, unexpected costs. This type of loan is usually repaid on your next payday. This means you have between two to four weeks to pay off the loan.

How to get a Payday Loan Online or Near Me?

Obtaining a payday loan is usually an easy process. You need to come to a cash loan store with a document, proving your source of steady income, ID and a blank check from your checkbook. The assistant will offer you a limited sum, such as $100 to $500 that has to be repaid until your next payday. You will also agree to pay off additional amount – $15 for every $100 borrowed, on average.

Lenders usually require a backdated check to finance the credit plus fee and inform you that the check will be cashed at the end of the loan period.

In some cases, lenders ask to provide a permission to electronically take away money from your checking account. When it is time to repay the loan, bankrupted borrowers suddenly realize that they need every dollar from their future paycheck to cover existing credit, so they go back to the lender and ask for a repayment delay. And this, of course, will bring additional expenses.

How to spot a legit direct lender

Payday lenders are regulated by the federal Truth in Lending Act. The Act imposes that a lender reveals the cost of the loan. Payday lenders are also obliged to disclose the fees and the annual percentage rate (APR) in written form before you sign the contract.

There are still many lenders, who execute loans out of shopfronts. However, more and more lenders use the internet to lend the necessary money. There two types of online lenders. The first type offers loans with no middleman, while others operate as information brokers that collect and sell information they gather to creditors.

How to qualify for a payday loan?

Many applicants face difficulties on the way of obtaining payday loans. Most payday loans online are designed for borrowers with at least 600 credit score. Even if the average American citizen’s credit score is usually higher, you should not give up in despair. There are other factors influencing the possibility to qualify for payday loan. Your creditworthiness and steady source of income are among them. However, there are some basic requirements for all borrowers regardless of their credit score:

  1. Legal age or older
  2. Proof of employment for at least 90 days
  3. Minimum amount of income $1,000 per month
  4. Active bank account
  5. Active telephone number and email address

Fortunately, almost all borrowers with bad credit can obtain advance payday loan. There are some payday loan lenders, who do not even run a credit check. Instead, you must provide some personal and financial details:

Steady source of income

Your payday loan provider needs to be sure that you are able to repay the loan. In order to convince the lender, a borrower should assert a steady source of income. It is important, because most payday loans are unsecured. Therefore, a lender requires some information to de-risk himself from defaults. However, online payday lenders do not necessarily require having a full-time job. A document proving the disability, retirement or self-employment is enough. Some lenders may set minimum monthly earning requirements as well.

An active bank account

Most borrowers have to prove that they have an active bank or savings account to obtain a loan. Many lenders also demand you to prove that your bank account is active for at least a month, too.

Any form of ID

At last, you need to provide some form of identification document. It can be your driving license, passport, government-backed ID or any other type of identification, that will help you to get the cash advance. Also, your contact information is necessary.

If it is an online application, you are to provide the date of your birth, address, social security number and contact information.

And the last but not least is a proof of absence of bankruptcy or ensure the lender that you are not intended to do so in the immediate future.

Online Payday loan terms and rates as regulated by law

Lenders offer quite high rates as much as 780% in APR, with an average loan running at nearly 400%. However, many states regulate limit interest fees from 5% to 30%. Unfortunately, some payday lenders are subject to exemptions, allowing them to charge high interest rates.

Every potential borrower must remember that each state regulates payday loan charges individually. And be aware because there are lending loopholes allowing loan lenders to escape the legislations. There are 16 states –Arizona, Arkansas, Colorado, Connecticut, Georgia, Maryland, Massachusetts, Montana, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Dakota, Vermont, and West Virginia – plus the District of Columbia prohibiting any kind of payday loans.

For instance, the state of California, allows a payday creditor to impose a 14-day APR of 460% for a $100 loan. A potential borrower should also consider that finance fees on payday loans online are a significant factor, as the standard fee is $15 per $100 of loan. Truth in Lending Act demands that payday lenders reveal the finance fees in written form. It is considered a law violation to ignore this act.

The duration of a payday loan is about 30 days or less, usually. This helps applicants to meet short-term engagements. Payday Loan amounts usually start from $100 to $1,000, and $500 is the most popular amount of loan. If it happens that you roll over your loan, expect additional fees. Therefore, almost 80% of the borrowers become steady customers.

The 2008 financial crisis enforced lending laws to regulate payday loan lenders’ activity and allow to file court cases against the lenders. These laws permit to build a clearer and fair lending market for borrowers.

Are there any Online Payday Loan Alternatives?

In case banks refuse you quick-cash financing, there are always other options to meet your emergency needs till the next pay day:

  1. Apply for a personal loan online. It will let you get up to $35,000 at lower interest rates.
  2. If you need not more than $5,000, Online Installment Loans will suit you perfectly.
  3. Credit card. It is cheaper if you can repay the card balance within 30 days till the interest starts to be charged.
  4. If you own a lien-free car title, use it to secure a Car Title Loan and get up to $10,000 instant cash same day.
  5. If you are a member of a credit union, consider borrowing form them.
  6. Ask your relatives or friends for help if it’s not too embarrassing and is not going to hurt your relationships.
  7. Make some extra cash with side gigs.
  8. Ask your employer for a payday advance.
  9. Apply to non-profit financial organizations for emergency relief assistance.
  10. Pawn some unnecessary items.

Online Payday Loan Questions Answered by Prof. Thomas Wright

Are payday loans long-term?

Same day loan is a short-term cash advance. A borrower must provide personal check held for deposit or an access to the borrower’s bank account. Applicants fill in a personal check for the borrowed sum plus the finance fee and finally receive cash.

What is APR?

APR or Annual Percentage Rate is a determinant showing how much a borrower has to pay for payday advance monthly. Regarding credit cards, it is extremely important to carry a balance from month to month. Many credit card companies offer federal rollback for new obtainings. If a borrower manages to pay off a payday loan on time every month, no interest is charged. There is a special APR calculation formula to settle how much fees you pay on your outstanding balance. The type of the card determines whether it will be calculated daily or monthly.

Do you have to pay back payday loans all at once?

As soon as you received an approval for your payday loan, you will receive money immediately. There are several ways to get cash advance online: you can receive the amount in cash or a check, or have the money transferred into your bank account. After that, you have to pay off the loan fully plus the finance charge by its deadline, which is typically within two weeks or by your next payday.

Do payday loan lenders check your bank account?

Payday loan lenders ask for your account number and bank code for several purposes. Many types of loans need your operating bank account to qualify. This is an easy way to confirm that you’re eligible.

Does a payday loan hurt my credit?

The three major national credit reporting companies do not demand from financial organizations to report about payday loans. Therefore, it is most unlikely that a payday loan can damage your credit history. Furthermore, payday lenders do not take into consideration traditional credit reports or credit scores when estimating a borrower’s creditworthiness.

How long does it take for a payday loan to be repaid?

Payday loans are usually paid off in two or four weeks, until you receive the next paycheck. Plan your budget so that, as soon as you get the paycheck, you will have the finances to repay your loan and cover any other bills for the month.  Eligibility and processing times may vary based on the amount of the loan and your creditworthiness.

Can you take out 2 payday loans at once?

Unfortunately, no. It is possible for a borrower to have only one payday loan at any given moment. As soon as you successfully pay back the loan, you are welcome to apply for another one. Even more, your credit history may improve, which allows you to obtain a loan with a better fees and terms.

Can I qualify for a payday loan with bad credit?

Most lenders nowadays offer payday loan options for applicants with bad credit history. It imposes that applicants with exceptionally low scores can receive the cash advance online they need from a trusted, reliable, and experienced creditor.

What is a bad credit?

FICO (Fair Isaac Corporation) states that a bad credit score is the one falling below 580. According to FICO, a person with a credit score in that scope is considered to be insecure. Why? The research manifests that approximately 61% of poor credit applicants result in delinquency on their credits.

Summary

When you are short on cash and there are some weeks until your next paycheck, payday loan becomes a good opportunity to cover your expenses. However, some risks go with the possibility to cover all of your needs. Choose the lender wisely. Analyze all available options and go for the rates and terms that best fit your financial situation.

Credible and Reasonable Loan Choice from EconomyProfessor.com

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