A payday loan is a type of fast cash loan wherein a sum of money which is borrowed for a short period at a very high rate of interest. You get your money extremely fast, but the cost of such a loan is the high-interest rate which is accompanied by it. The borrower writes a personal check, usually post dated in the amount that they want to borrow along with a fee in exchange for money. The check is cashed on the desired day, and such loans are called cash in advance loans. Fast cash loans are usually given for an amount of $100 to $5000.
Lenders tend to charge exorbitant rates of interest for payday loans. Therefore, some jurisdictions have put a cap on the annual percentage rate (APR) that a lender or an institution can charge. In the country, rate percentage of 30-40% is the acceptable range. There are some jurisdictions where the concept of payday loans is looked down upon entirely, and the practice is forbidden.
Different companies have different criteria to assess the credibility of the borrower. Someplace importance on the income while others on other factors. Some companies do not run thorough checks such as checking credit ratings which can be quite problematic at times. Consumers complete the loan application process online, and the money is then transferred directly to the borrower’s account, and the money is electronically withdrawn from the borrower’s account on the due date. Traditional payments involve physically going to these institutions and paying the money.
Fast cash loans may seem like a temporary solution to your financial problems, but in reality, will only exacerbate them in the future. If you are unable to pay back your loan in your next paycheck, additional charges will be placed which only makes matters worse. The exorbitant interest rates charged will further contribute to unnecessary, extra charges and will not help in increasing your credit ratings which after all is the most important thing to do.