If you are in need of cash you may be looking for ways to help you pay your bills or to help you pay for something urgent. If you are struggling to find the money you can take out a payday loan. Here is everything you need to know about payday loans.
What Is A Payday Loan?
A payday loan is a loan that a company can give you if you are running low on cash. It is one of the many options that you have available to you if you need money quickly. A payday loan is intended for a short term borrowing solution because the lender company offers you the money you need in exchange for high interest. Another name for a payday loan is a cash advance loan or a check advance loan.
How Does A Payday Loan Work?
This type of short term borrowing is referred to as a payday loan because you use your paycheck as security with the lending company. The lending company is guaranteed their money on your next paycheck because when they give you the loan you are asking for you must in return give them a postmarked check. The lending company will then cash the check on the date that you postmarked. The funds will be withdrawn from your bank account on that day whether or not you have the money. This ensures that the lender company gets the money they are owed and that you get the immediate cash advance that you were looking for.
Do They Check My Credit?
Most lending companies do not check your credit if you are getting this type of loan. They do not feel the need to check credit because they are not dependent upon your return. You leave them with the collateral they need, which is your postmarked check. If you want to secure a loan with a lower interest rate you may ask if they can negotiate with you to give you a lower rate if you have good credit. Some companies will be willing to do this, but others may not. The typical rate that a lending company will charge you is about 15 to 30 dollars for every 100 dollars that you spend. This charge can change but is typically set by the Consumer Financial Protection Bureau.
Consequences of Loans
Oftentimes people are able to get the cash advance on the loan and pay back the principal loan plus the interest on their next payday. For others, this may not be the case. If you take out a payday loan and do not have the funds to cover the principal and interest by the time your next paycheck comes in you may find yourself in even more debt. If you have unexpected expenses before your next paycheck comes in you may find yourself in a difficult situation. It is crucial that when you take out a payday loan you stick to your budget and do everything within your power to help you get out of debt.