If you wonder when a
payday loan comes in handy, the answer is: whenever an unexpected situation arises and you cannot resort to any other source of finance because you don't have enough time to go through regular loan procedures.
Emergency Solution
There are many common situations that may happen and catch you without enough money to solve it. Unexpected expenses, running out of cash when your payday is many days away, medical bills, legal fees, medicine, an urgent car repair, etc. In any case the need for cash is so pressing that the only choice is to apply for a payday loan.
Payday loans explained
A
payday loan is a cash advance that is due by the borrower's next pay day. It beats personal loans in a sense because it has fewer requirements, so almost anyone can apply for a payday loan without fear of being declined. It doesn't require credit checks or using an asset as collateral, nor too much paperwork or delays.
Requirements
Actually,
Payday Loans only require the applicant to have a bank account and a stable job. These requirements are imperative because the loan amount is transferred to the borrower's saving or checking account and eventually, when the next payday arrives the loan amount and the interests are removed from the same account, unless of course, the borrower pays it off in advance.
Due date and extensions
Usually the length of the loan is limited to the time between paydays. However, it is possible to request an extension or pay it partially and request an extension for the remaining of the loan. Some lenders are more flexible than others, you should bear in mind though, that this kind of loans carry high interest rates. You should be then especially careful when requesting a time extension.
Loan amount, renewal and interest rate
When it comes to loan amounts this loans don't have much to offer. They are meant for emergency situations and usually range from $250 to $1500. Many lenders offer the possibility to renew the loan if paid on time and tend to pay special consideration to those clients who pay the loans in advance when deciding the interest rate charged.
Since there are usually no credit checks this kind of loans are ideal for people with bad credit, no credit or even bankruptcy who can't opt for other type of loans. The only drawback is that the interest rate charged can be almost as high as twice the interest rate charged for personal loans or even credit cards.
But if you are in a rush, a payday loan is the right option for you. Payday loans are approved within 24 hours, while regular loans can take many days or even months to get approved. When you don't have enough time and you are in need of money you can understand that that is exactly what you're paying for, when you pay a payday loan fee.
Choosing wisely
There are many payday loan lenders out there. Some do require credit checks and sending documentation via fax, so you ought to be careful when searching for a lender. There are also many online lenders who offer faxless applications without credit checks and almost no paperwork. Don't hesitate to contact the lenders to inquire them for loan quotes, then compare and decide.
