You've probably heard some talk about payday lenders in the news recently. Several states have passed legislation allowing short term loans as short as seven days duration, and because there are costs associated with extending these special, short term loans, they are much more expensive in terms of annual percentage rate. By that I mean the annual percentage rate is higher than bank and credit union loans. Some consumer action groups are fighting this type of business because it can be a problem for customers of payday lenders who are not careful to budget their loan repayment out of their next paycheck.
But I'm getting ahead of myself, let's go back and start at the beginning now. The reason I brought up the controversy first thing, is because it has been in the news from time to time. Some states allow payday lenders to operate within their borders, and some do not. All I can say about that is that there are plenty of customers who could surely benefit by having access to fast cash when they need it. I think you'll see more and more states passing legislation allowing payday lenders in the future, especially as a result of this ongoing, difficult economy.
Payday lenders only work with customers who have a regular job with a regular paycheck, and usually the requirement is that the customer has had his or her job for at least a month before applying for a payday loan. Also, a customer has to have identification information and be at least 18 years of age or older. Besides a pay stub and proof of identification, customers also need to provide banking information for the purpose of automatic deposits and withdrawals. That's how payday lenders distribute the loan funds and it's also how they collect the loan repayment on your next payday.
The reason they are called payday loans is because that's basically the lender's security for the loan. You give payday loan cash advance lenders the ability to deposit money and to withdraw money as agreed. They cannot deposit or withdraw without your permission of course, so that is the purpose of the paperwork associated with your loan. In it you agree to repay your loan of a certain dollar amount, along with interest on the loan and fees as well. Bear in mind that the fees on no fax payday loans generally exceed the amount of actual interest charged, resulting in the high annual percentage rates mentioned earlier.
Take your time to check out payday lenders in order to find out what they charge and how their programs will work for you. Apply for a loan only if you understand thoroughly and have budgeted for loan repayment out of your next paycheck the day you receive it.
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