All About Payday Loans
These loans do not provide large sums of money to their customers. The borrower is expected to repay the money within a short period of time.
Who is eligible?
There is no strict criterion mentioned for qualifying for the loan. Generally, everyone over 18 years of age, having a permanent job and holding a bank account are considered eligible.
Some lenders will only insist that the applicant be 18 years of age. Therefore cash loans will be offered even to those who do not hold bank accounts. Furthermore, some lenders even accept other income forms like unemployment benefits.
Difference between conventional loans and payday loans
While a payday loan is designed for meeting unexpected small bills, the former is designed for big items, some of which include buying a new car, holiday, to prevent cheques from bouncing, to make credit card payments or even for debt consolidation.
Moreover, conventional loans have longer repayment duration. In other words, borrowers are able to repay their loan over a period of few years, as against the 30 days repayment period imposed on payday loans.
Lenders of these short term loans are not fastidious when it comes to lending money and often lend money without conducting a credit check. On the other hand banks and finance companies lend their money only to people with good credit rating and good income. No wonder people with bad credit often still get approved.
The biggest difference lies in the rate of interest. Interest rates on payday loans are much higher mainly, because finance companies consider such types of loans to be highly risky.
Application to these types of loans has become child's play because of the internet. It can be filled within a few minutes from your home itself. There is no interview, no wait and no embarrassing questions asked.
There are different types of these loans available. Online payday loans among them is the most popular. Since it is processed through the net, its approval is fast and offer cash to the borrowers almost instantaneously. It therefore serves the urgent need of the borrower. Moreover since the loan taken is not big it can be repaid on time. They are convenient, but use it occasionally and not as an additional source of income.
Borrowers must look into both the pros and cons of payday loans. They must ensure that it is taken only during times of emergency and not taken too often if you do not want to experience crisis in your monthly budget.