Payday loans, which is also called “cash advance loans”, are short-term loans used by people to gain cash for immediate needs between paydays. For employees to apply for a payday loan, they are required to present an identification card with a recent photo as well as proof of income which may come in the form of previous pay stubs. The customer may provide post-dated personal checks to the creditor that indicates the total amount of the cash loan and other fees.
Normally, the lender will present legal documents that describe and entail the terms of the loan. These documentation typically include interest rates, finance charges, and loan fees. Once the necessary documents are signed by both parties, the customer will then receive the cash loan. Ideally, the loan must be paid in full when the next payday comes. If not, the terms will be extended or in other words, rolled over.
Aside from the general concept of payday loans, below are other things that must be learned by someone who is interested in applying for the loan.
Installment Payday Loans
Installment payday loans are the newer version or variation of the known payday loans. In regular payday loans, the borrower is supposed to repay the loan including other fees when the next payday comes. In installment payday loans, on the other hand, the borrower will repay it in installment basis in order not to sacrifice such a big amount from a single paycheck. However, the overall sum of the repayment will be higher because of interest rates and other fees. Despite this, a lot still choose installment payday loans because it is lighter on the budget.
Payday Loan Laws
As the popularity of payday loans among consumers continually increase, laws for payday loans that aim to protect consumers are enacted and implemented. These laws generally protect consumers from being charged with very high interest rates and other fees. These laws also prohibit unlawful and unfair collection practices by creditors. Thus, those who are thinking of applying for payday loans can do so without worrying too much, since they are duly protected by the law. However, this should not be a reason for borrowers not to pay their dues on time or as termed.
Choosing the Best Payday Loans
Of course, anyone who would want to try taking out payday loans should be able to find the best ones. In order to get the best payday loans – one that has the best terms and most affordable rates and fees – one must engage in an in-depth research and read through the fine prints of different loan offers. In most regions and states, lending companies are mandated to be more upfront about the rates and fees that go along with the loan itself. The terms of the loan must be properly and completely discussed to the borrower. When looking for the best payday loans, the customer must look for a lending company that opens up about the fees and rates. They should also get one that explains everything that must be understood. Meanwhile, the borrower must be cautious with details and as much as possible, must not hesitate to ask questions about the loan terms.
Avoiding Payday Loan Scams
Sad but true, payday loan scams do exist. Thus, it is necessary for a borrower to be doubly careful in signing up for particular payday loans. The borrower must conduct the necessary research about the company he or she plans on dealing with. The borrower must gather all the information about a particular lending company and determine if it is legit and licensed. The borrower can also ask for recommendations from colleagues who have already taken payday loans and compare the lending companies they have recommended.