Frequently Asked Questions- Payday Loans
What are Payday Loans?
Payday Loans are short-term loans that may be referred to by many names, including payday advances, cash advance loans, cash check advances, or faxless cash loans.
A payday loan is a short-term loan in which you borrow money from cash payday advance lenders at a high-interest rate based on your income. The principle of the loan is often a portion of your next paycheck. Because payday loans are meant for short-term financing, so they carry high-interest rates. “Cash advance loans” or “check advance” loans are two terms used to describe these loans.
What is the difference between a payday loan and a regular bank loan?
These loans distinguish by their relatively small dollar amount. This is especially because they are typically between fifty and fifteen hundred dollars. You will pay the loans as designed when you receive your next paycheck.
What do I need to apply for a payday loan?
Many websites allow you to apply for payday loans online, making fax-less payday loans quite common. To receive a payday loan online, many lenders ask that you have a job and a checking account in good standing. You must also provide identification and a post-dated check for the borrowed amount.
What does the payday loan process involve?
Payday lenders are often small credit merchants with physical storefronts that take credit applications and approvals on the spot. Certain payday loan services may be available through online lenders.
The principle of a loan is often computed as a percentage of the borrower’s projected short-term income. Many lenders will also hold a borrower’s earnings as collateral. Lenders need to conduct a full credit check or consider your ability to repay the loan. Pay stubs from your employment that show your current income are normally necessary to complete a payday loan early application.
The process involves filling out a relatively short application, getting approved, signing some forms, and having the funds electronically deposited into your bank. The direct payday lender verifies your bank routing number and bank account number. With your funds distributed electronically, the lender debits your repayment from your checking account on your next payday.
Depending upon when you submit your completed application, you may receive your requested cash on the same business day. In most cases, however, approved loan amounts are available the following business day.
Is it Possible to Get a Payday Loan Without Having a Bank Account?
Yes. Although having an account isn’t essential to borrow money, lenders that don’t charge exorbitant interest rates usually do. Many lenders fall within this category. Lenders may need a bank account. However, a prepaid card account may be sufficient in certain cases.
Avoiding these loans is likely preferable since they’re so expensive and tough to return. Fees may mount up quickly if you don’t repay the loan on time, trapping you in a debt cycle that’s difficult to escape. As a result, you should only take out a payday loan if you are certain you can repay it.
Can I still apply for a payday loan with bad credit?
Yes, all credit types are welcome to apply. Some lending companies and credit unions allow applicants with bad credit to apply for a payday loan.
What if I filed for bankruptcy? Can I still apply?
You may still qualify for a payday loan if the bankruptcy has been discharged. More traditional loans may require you to put up some form of collateral if you have credit difficulties or your credit could be better. This is not the case with a payday loan online.
Is my personal information safe when applying for an online payday loan?
Reputable cash advance lenders offering direct payday loans verify your personal information through secure websites and encrypted technology. The process should be similar to those used by employers who offer direct deposits.
When is credit counseling needed?
Customers may seek credit counseling for help with consumer credit, money management, debt management, and budgeting. Mostly, it is designed to help a person avoid bankruptcy if they are having difficulty repaying their bills.
Many counseling services will negotiate with creditors and financial institutions on behalf of borrowers to reduce credit card and loan interest rates and remove late fees. According to the Consumer Financial Protection Bureau (CFPB), most credit counseling businesses are nonprofit. However, there are for-profit credit counselors.
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