Payday loans are small loans that come with a short repayment period of about two weeks or less. The payday loan industry does not involve banks, but businesses that lend these loans for a huge fee, incurred by a high interest rate. The loan process is not complicated as the applicant does not have to produce any collateral. The eligibility criteria and application process involved in securing payday loans are discussed here.
Anyone who is currently employed or has a regular income source and has a bank account enabled for a direct deposit is eligible for a payday loan. Before approving your application, the loan provider compares the amount you intend to borrow with the amount you earn. If you apply for a smaller amount, the chances of getting approved are higher. The Internet is a perfect place to get an instant payday loan as it can be processed within minutes. While applying through the loan provider’s website, you will have to enter your name, address, email address, employment details, monthly income, bank account information and the date of your next payday. The result of your application process, whether it is approved or rejected, will be instantly conveyed to you via email.
If your application is approved, you will be asked to agree to a set of conditions and the money is deposited into your bank account. You agree to repay the loan and the fees on your payday, as the term ‘payday loan’ suggests. The amount is collected by debiting your bank account into which your salary is paid. Apart from electronic access to bank accounts, some lenders also ask for post-dated checks. Their contracts set forth conditions, such as not to close your bank account till the loan is repaid and not to file for bankruptcy. Payday loans may be extended if you are unable to repay on the agreed date, but the charges will keep accumulating.
The loan amount is usually a few hundred bucks, but can cost as high as $30 for each $100 that you borrow. Payday loans can solve emergency cash flow problems, but it is wise to borrow only the required amount of money and repay quickly to avoid exorbitant charges accrued by the high interest rates.