Although payday loans have become very popular around the world, some people are still not sure how they work. Many people have not yet had an opportunity to experience their convenience. Anyone who has a job and a fair amount of income can apply for a payday loan. Applying for a quick cash advance is one of the easiest ways for people to get the cash they need for anything they desire. A consumer can use a payday advance for anything from a spur of the moment shopping spree to a bill payment to a bail bond. With payday advances, the consumer is in control.
What is a Payday Loan?
The name “payday loan” originated from the structure of the first cash advance of this type. This loan was created for people who had trouble surviving from one paycheck to the next without the need for cash. A caring lender decided that it would give an opportunity for consumers to borrow short-term loans until their next paycheck. The concept has stayed the same ever since.
Payday loans are short-term cash advances that have a life span of approximately 14 days. The lender allows the consumer to borrow cash until his or her next paycheck. When the customer’s pay date comes up, the lender deducts its payment from his or her bank account. That is how payday loans work. They are not meant to be long-term solutions. They are meant for the consumer to use as a lifeline in a financial jam.
How to get a Payday Loan
It is very easy for a person to apply for a payday loan. The consumer can apply online in a matter of minutes. The application is easy enough for any person to complete. Applications are usually divided into three sections. The first section contains contact information such as phone number, address, name, and so forth. The second section usually contains information about the applicant’s employment and income. To qualify for a payday loan, the applicant should have employment for several months. Additionally, the person should have an income of at least $1,500 per month.
The last section of the payday loan application will ask the applicant for bank account information. It is extremely important that the bank account information is correct. It is equally important for the bank account to be in good standing. It must maintain a positive balance and have no history of negative transactions. The lender uses the consumer’s bank account to send and receive payments. Therefore, it is crucial that this bank account be up to standard.
After the applicant submits the application, the lender will perform verification. It will make phone calls to the person’s job and bank to make sure the information is legitimate and correct. Payday lenders do not consider a person’s credit history. Most of them do not ask for a person’s social security number. They only care that the borrower is in a position to repay the advance. Employment history and income amounts determine that.
If the applicant passes the verification, the lender will approve the advance. Upon approval, the lender will create a contract for the applicant to sign. The contract will specify the lender’s terms such as the finance charges and the payment date. Once the applicant reads the contract and decides to sign it, that person becomes a borrower. The lender will deposit payday loan proceeds immediately. The borrower can use the funds any way that he or she sees fit. He or she can use them for household responsibilities or for pleasurable activities. When the repayment date comes up, the lender will deduct its fees without hassle.