Payday loans can help you when you are experiencing financial problems. These loans can be suitable for many people including those with good financial history and who just want some cash to cover expenses. Like any other loan, a payday loan also comes with some risks. Therefore, it’s a good idea to know the payday lender’s terms before you decide to apply.
That said, payday loans are regarded as unsecured personal loans that you have to repay on the next payday. No doubt, this is a tempting option because you can access money quickly. This post discusses what you need to know about a payday loan.
Understanding a payday loan
As explained earlier, a payday loan is just an unsecured loan that you can access and repay by the next payday. These loans are usually a popular option for people with poor credit history. Before you decide to take a payday loan, it’s important to check the interest rates or any hidden fees. Remember that payday lenders tend to offer different interest rates, so make sure that you find the best deal available on the market.
There are many payday lenders on the market with different terms for their loans. Most of them prefer you to repay the full loan plus interest on your payday. The good thing is that payday lenders don’t do a credit check, meaning that they are not interested to know your credit history.
How payday loans works
You can usually take a payday loan either through a physical shop, My Quick Loan, or even an online payday loan provider. To determine the rate and terms that can apply to your loan, a payday lender can ask for a hard credit check to see your credit score. However, this is not common because most payday lenders tend to use a soft credit check. The payday lender can also need you to give proof of income and the pay date.
In most cases, a payday loan is regulated, so some laws can limit the amount of interest rate or fees that lenders can charge you. When it comes to repaying a payday loan, there are various ways you can use it to repay it. You can decide to give your payday lender a postdated check that they can deposit on the next payday. You can also authorize a payday lender to withdraw the funds from your checking account when your employer pays you or even when you receive funds from other sources of income like a pension.
You should remember that many payday lenders don’t consider your credit score. This is because most of them get the authority to withdraw their money from your bank account once you receive your paycheck. This is how these payday lenders reduce their risk. Also, they can give you a payday loan based on a percentage of your expected income. If you don’t have the expected funds by your next payday, you can agree with the payday lender to roll over the loan. In this case, you may need to pay the full amount of the loan and the interest on the next day.
