Over the recent years, payday loans fast became the popular way to obtain short-term funds for a financial emergency. An individual pays off this loan on their next payday, in one week, two weeks, or monthly.
Payday loan amounts are assigned according to the individual’s income. Payday loan amounts range from $100.00 to $1,500, depending on proof of income.
Payday loans are paid in full on the next payday, or the person can put their loan amount on the repayment schedule over three months, divided up in equal amounts, including interest and fees.
Payday loans never impact your credit score unless you force the company to deposit your check and it bounces. The company may report this to the three credit bureaus and put a nationwide alert on your checking account so that no one will accept your check anywhere you present your check.
You can get a payday loan by physically visiting a payday loan establishment in your city or by applying for funds online. Payday loan popularity has increased in popularity because these firms do not request a credit score or inquire about the person’s payment history found through the three most important credit reporting agencies. And, getting money is quick and easy, if the individual meets the simple criteria to loan.
Criteria for a Payday Loan
The individual must present proof of a steady income from a job or Government agency such as Social Security. The individual must submit proof of income, such as wage statements and current Social Security Award letter.
- A photo ID such as a state ID or driver’s license
- An active checking account with a 30-90 day print of account activity
- Proof of residence
- A working landline or cell phone
- Three to five references with addresses and phone numbers
Even though payday loans are a quick way to obtain necessary emergency money, the interest rates are high. In spite of these high levels of interest, people do not seem to mind the high degree of interest, as long as they can meet their financial crisis.
The person must make out a check payable to the loan company for the amount they borrow because if the individual does not pay off their loan amount on the date due, the loan company can deposit this check in the bank for payment at the end of the day. The company holds this check until the time of the person’s next payday.
Popularity with a Bad Reputation
- High-Interest Rates
- Payday loans cause a negative debt cycle. People pay off the loan and find they must continue to re-loan as soon as they pay the loan off because this cuts their budget too short and they cannot afford to do this.