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An Insider's Perspective on Payday Loans

At some point in your life, you will need to reevaluate your finances. Economic status can be a big catalyst for some to look at where their money lies and what they need to do with it.

When the economy is suffering, so does your budget. There are times when you might need money to get you out of a tight spot.

For instance, you may have some unexpected medical expenses, or some car repairs. Or perhaps you don't want to risk an overdraft fee in your checking account for an unexpected bill.

These situations happen to almost everyone. It would be nice if we all had enough money to take care of our needs and even most of what we want.

But that is not how our society works. It is just simply true that people struggle to get even the basic needs of life.

So when you need money fast, what do you do? You may or may not have been aware of payday loans before today.

So we will go into some detail about what they are and how to get one. These loans are sometimes called a cash advance loan.

They are very legitimate and successful ways to get cash very quickly. Unfortunately, payday loans have been given a very bad reputation, but most of that has been the fact that people don't use them wisely and then blame the industry for their bad financial decisions. On the flip side, these loans, when used very responsibly, can be an ultimate life saver for some.

Payday loans usually only last about two weeks. It mimics the time frame from when you get the loan to your next paycheck. Repayment of the loan comes from a post dated check or a post dated withdrawal from your bank account on the next payday.

There are some disadvantages to payday loans if they are not used correctly. One of these disadvantages is the fees that accompany a loan extension if you are unable to pay your loan back in the time frame you agreed upon. These fees can really add up if you keep extending your loan, so that is really the only warning I have for you regarding the disadvantages of payday loans.

The application process for payday loans is relatively simple. The application is short that asks you where you work, your personal information like your home address and telephone number, and then it does ask your monthly income.

There is also a need for you to provide some information about your bank account. It usually only asks for the name of your bank and the account number. If your lender has a good reputation, don't worry about giving them this information.

A payday advance is a short-term loan which usually lasts about two weeks. It is paid back by writing a post-dated check or agreeing to a future electronic withdrawal to be taken out of the borrower's bank account on their next payday.

The lender will probably ask you for a recent paycheck stub from your job, your latest bank statement and a copy of your driver's license. With payday loans there really is no credit check involved, so you don't need to worry about your credit rating in order to be approved.

There will also usually never be any collateral to get this type of loan. The entire application process should only take about half of an hour and you will get your money soon after that. The payday advance is very easy, if it isn't, then I suggest that you rethink your lender and find another.

As with any type of loan, there are things you need to be aware of. Before you apply for the loan, make sure you are going to be able to pay back the loan entirely, including the fee that is charged to you.

When one looks at the traditional APR of loans, payday loans have a very high APR. But this is only a problem when the loan is extended past the original term.

To give you an idea of what I mean, the APR should not be more than about 400%. But a two week loan for $100 at 391% will give you a $15 charge. That makes the total only $115. That is not a bad price for the money you need quickly.

It is very advisable that you pay off your loan as soon as you can. You should ask your lender if they charge you a fee for early repayment.

To give you a better idea of how it can be if you extend your loan, here is an example. Another fee of $15 would be added to your total if you extended it.
Most payday loans can only be rolled over about three times. And if you did that, the original amount of $100 can turn into $160 to pay off.

Who wants to pay just as much in fees as their loan was in the first place? Not many, I'd wager. Payday loans exist to help people in financial crunches and although you can use the money for whatever you choose, it is advised that you get one only in urgent, or emergent, situations.

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