Proceeds from a fast cash loan can help you in a variety of ways. If your business appears to be struggling to stay afloat, you can borrow money to boost its capital.
On the other hand, you may be short of fast cash to fund your day-to-day expenses. A short-term loan will sort that out for you. Out of the different types of fast cash loans online available, a payday loan is among the most popular.
Payday loans are short-term instruments of borrowing money where lenders extend credit on the strength of one’s income.
The facility is also referred to as check or cash advance loan. As a borrower, the expectation is that you pay back on your next paycheck.
For the fast application process, you require copies of your recent pay from your employer. These stubs act as proof of your income level. Lenders can use your monthly income to determine the amount they can offer. Besides, the wages act as collateral. Your credit check and score are other determinants of your borrowing capacity.
To secure the loan amounts, all you need to do is to visit a lender who will then vet and ascertain that you have all the paperwork required.
Once approved, you must provide the lending house with a postdated check bearing the borrowed amount plus interest and fees.
Upon maturity, usually your next payday, should you fail to pay, the lender has the right to redeem your check. If your bank account has insufficient funds, the check will bounce. Meanwhile, the bank will charge a fee to your account.
Also, the lender will slap you with additional charges, increase the rate of interest or punish you both ways.
A payday loan duration is around 14 days given that you must repay your loan in one lump sum on your next payday.
However, you may request the lender for a rollover until the next period but this depends on the terms and conditions of the initial agreement. This request comes at a cost or what the industry refers to a finance charge.
The question of whether payday loans are more expensive than other borrowing alternatives boils down to one thing – repayment as agreed. If you miss a payment as scheduled or opt for an extension, the lender charges interest and other fees.
Emergencies do arise when you least expect it, and you suddenly find yourself in a position where you need fast cash. A child may fall ill, the plumber working on your house needs payment or an elderly parent requires medication.
These and other expenses cannot wait until the end of the month when you get paid. Since the requirements are that you pay the loan amounts once you receive your salary, you only incur the debt for one or two weeks. Main benefits include:
Unlike other types of loans where you must provide collateral, all you need for a payday loan is a verifiable income that must also be regular.
A stable income assures a lender of your ability to repay your loan. You must also have a permanent job. On the other hand, banks and other financial institutions insist on having a strong credit score to qualify for a loan. However, bad credit cannot deny you a payday advance.
Online application of loans is now well established, you no longer have to visit a lending office or make endless calls. You can request for and get an online approval from your desk at work, couch at home or a train seat while in transit. Besides, you get cash to spend compared to using a credit card.
With all the relevant information, approval is instant. There are no forms, lengthy paperwork or hidden fees. Moreover, once everything is checked, borrowers get their loans fast almost instantly. Other loans may take weeks meaning that you cannot rely on them during emergencies. Besides, there is no guarantee of approval.
Despite payday loans having a short repayment period, this is an advantage rather than a shortcoming. Take installment loans for example. It takes an average of two years for one to make full repayment. During that time, something may unexpectedly happen and affect your earning ability. Eventually, you default and your good credit reputation suffers.
Fast payday loans are ideal for financial emergencies. You obtain quick cash with no collateral required. At the same time, your credit status is immaterial.
All it takes is that you repay the loan as soon as your next salary comes along in a week or two. However, they are not long-term financial solutions.