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Tuesday, July 17, 2012

Payday Loans: What's The Pay?

Payday loan, as its name suggests, is the type of loan you go for when in need of immediate cash.
The loan is often short-term and is charged at higher rates due to this reason. Emergencies are bound to occur any time and if they necessitate instant money, then payday loans will be the best solution. These loans are favored by instant borrowers since they are easy to obtain and are also very convenient. If you need quick cash but are unable to secure a bank loan, may go for these loans.
However, they have some drawbacks. You ought to be very carefully when deciding to apply for payday loans, since some payday loan providers may charge you up to 500 percent in rates. You are expected to repay your loan within a short period (usually 2 weeks) together with this high interest.
This may be tricky as it is going to hugely dent your next pay.
The Amount to Borrow
This utterly depends on your after tax income. The finest thing with this loan is that they do not check your credit history.
Whereas the requirements for payday loans vary as the lender. However you should be 18 and above and have worked in a particular company for at least past 6 months. You will also need an at least six month old bank account.
Interest rates on a payday loan
Payday lenders charge borrowers quite high interest rates. It will be anywhere from 15 - 30 percent the borrowed amount.
The loan companies justify their huge interests account that the loans availed to individuals irrespective of their credit history and fulfillment of the fundamental eligibility criteria.
Banks' strict loan approval procedure has trafficked most instant borrowers to payday loan companies which are very flexible in their rules. Minimal paper work associated with payday loans is just but another reason why people are opting for these loans. However, these advantages come at a cost as you have to pay huge interests.
Controversies surround this industry and its benefit to the user. Consumers are rushing to these payday loans companies over and over, instead of applying them as last resort during financial emergencies. The tremendously high interest rates levied on the lenders tend to push them into more debts. A UK government funded, Consumer Focus noted that borrowers are increasingly depending on costly loans they cannot pay.
UK is not alone; Payday loans are causing consumer organizations and governments some concern. In Mississippi, US, the Senate recently passed engineereed to trim down fees charged on payday loans.

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