A payday advance loan is an unsecured loan that is usually given in very small denominations. As the name suggests, a payday loan must be paid back on the next “payday.” Hence, it commonly has a payment period of one month. There are many companies that provide payday loans. Given the nature and popularity of the business, many shops that offer payday loans have also opened in different neighborhoods. These loans are not given out by banks or any other financial institutions. Instead, they are only given by private companies. There are four main features of payday loans:
- They are relatively small. Payday loans start from $200 and go as high as $1,500.
- They are typically due on your next payday.
- The lender usually requires a postdated check (full balance including the additional fees/ interest) for the date on which the loan becomes due.
- The interest rate or fees charged is significantly higher. Some companies charge $10- $30 for every $100 borrowed depending on your credit score. Others charge even higher.
Advantages of a Payday Loan
There are many advantages of getting a payday advance loan. First of all, the processing times are much quicker. If you apply for a conventional loan from a bank, you will have to file an application, and wait for the bank to respond. The application itself requires a lot of effort to fill out properly. You will need to provide information about yourself, and your family (most likely). You will also have to provide information and attach several documents. Some banks might even require you to provide collateral. Then, you will receive a call in a few days about the status of your application. All of this takes a lot of time.
However, applying for a payday advance loan is significantly easier. All you have to do is visit the shop from where you want to get the loan and fill out one application. Most companies also allow you to apply online, making the application process even simpler. Once your application has been filed, you will know whether it has been approved or not within a day. Once approved, your payday advance loan will be credited to your bank account or you will receive the loan amount as cash.
Should You Get a Payday Loan?
That depends entirely upon the amount of money you require. As mentioned, a payday advance loan is best if you only require a small amount of money. It also depends upon how quickly you want the money. Payday loans are a better option than asking for money from anybody else, since they are kept confidential and can easily be repaid in a month.