Originally, a payday loan, also called a cash advance or payday advance, was a loan that was repaid on or before the borrower’s next payday. In today’s circles, repayment of a payday loan may not directly be involved with the borrower’s actual payday at all.
What Quick Online Payday Loans Entail
Quick online payday loans all have the same things in common. These loans are short-term, meaning that they are usually due to be repaid in full on or around an applicant’s next payday. Depending on when this payday actually occurs, payment may be due in a week, two weeks, or a month. Payment is rarely allowed to wait longer than one month. In contrast to an installment loan, which allows for multiple payments over time, payday loans require upfront payment in full.
When quick online payday loans are applied for, the applicant does not need to offer collateral in order to take out the loan. These short-term loans are unsecured. Collateral is something valuable that the applicant possesses, such as the registration to a car. If the applicant cannot repay, or has outright refused to repay, a loan, the lender then has the right to seize the applicant’s collateral. This is in order to regain some or all of the money that went unpaid. Payday loans are thus much riskier for the lender, and this is the exact reason payday loans tend to be for lower amounts and have higher interest rates.
Reasons to Take Out a Payday Loan
Payday loans are a quick and easy means to rectify sudden financial emergencies. There are thousands of situations that constitute a financial emergency, such as a sudden blown tire, unwanted overdraft fees at the bank, or unexpected medical bills. It is important to look at these reasons and recognize their urgency. Payday loans are not a cure-all to use against long-term money issues. Applicants should only look into taking one out if they know the loan can be repaid in full and on time.
If an applicant is approved for a payday loan and it becomes clear that one pay cycle is insufficient to repay the loan, all is not lost. Most cash advance loan companies will charge a fee for loans not paid in full by the next payday. However, it is crucial to reach out and communicate with the company’s representative. Given adequate warning, a company’s representative will be more than capable of reducing, but not removing entirely, any fees and accepting partial payments. Applicants should pay fast cash advance loans quickly so that interest is decreased.