What you need to know about payday loans
We live in financially hard times and it comes as no surprise that there is a lot of talk about loans nowadays. While people mostly shy away from loans, being embarrassed to admit they need someone’s help to get buy, this is a rather negative perspective to have. Bank loans are a reality the vast majority of people everywhere are dealing with. Some people take out massive loans to boost their business or pay for their houses, and those are the loans that usually take years, if not decades, to pay back. However, not all loans are like this. In case you find yourself in an acute need for money, say, to pay for a vacation, you will likely take out a payday loan. A payday loan is a short-term loan for those who only need a bit of cash and can provide an easy way out of your temporary money troubles. Here are some things to consider when taking out a payday loan.
Firstly, payday loans are really short-term, with the payback period being up to only twelve weeks. They are much smaller in comparison to most loans and an ideal solution for everyone who needs just a bit of cash to solve a burning issue.
When you go to the bank to discuss taking out this kind of a loan, bear in mind that its approval will depend in no small way on your previous employment and payroll records. And while the laws regarding loan regulations vary from one state to another, most countries impose limitations to prevent usury. In some countries the lenders may charge some amount of the annual percentage rate (APR) since those countries limit the APR in order to prevent usury, but in some countries there are no restrictions and limitations for the payday lenders. This is certainly something you should check before going to the bank.
Another important factor is the payback period. It may last for up to twelve weeks, but the very reason this is called the ‘payday’ loan is that you will usually be required to pay the full amount of the loan plus any additional fees the next time you get your salary.
Bear in mind that this is simply a minor loan to help you get by, and you will be able to take out only up to $1,000 in most banks. The reasoning behind such small loans is that you don’t need to have any collateral in order to apply for the loan. In some instances, the bank will be able to offer you up to $1,500 for a payday loan, but this right is reserved mostly for people who have taken it out previous and who have a proven track record of paying their debts.
To sum it up, payday loans are short-term loans involving a small amount of money. They are easy to apply for and get, but always be aware that you’ll have to pay them back in merely a few weeks.