A short-term borrowing process where a lender offers high-interest credits basis on your income is known as a payday loan. Payday is beneficial when you have stable monthly income which is helpful in returning the loan on the next payday. The loan can ideally be taken when someone needs some urgent cash when their salary already be over.
Some important facts on payday loans
Here are some important ideas about the payday loan which you must possess before you go and take one.
What is the nature of payday loans: fixed or variable?
In one lump sum amount you need to clear the payday loans generally after you get your paycheck, an interest rate of this loan type is fix due to this reason. There are different payday lenders who do not express their charges of theirs as an interest rate. Instead, they charge a fixed fee which is flat. This fee can range between 10 to 300 dollars per 100 dollars being borrow.
Are payday loans secured or unsecure?
Most of these loans are unsecure. You need not pay the lender any borrow or collateral against any valuable item as done in pawn shops. The lenders instead will ask your permission to take the money by electronic means from your bank, prepaid card account or credit union. Lenders can never condition a payday loan under federal law after obtaining the authorization from the customer for recurring the electronic fund transfer.
10 important features of a payday loan
You must learn about the features of payday loans thoroughly before applying for one and the 10 most important of them are as follows:
- There is a scheme of a loan with a short repayment tenure for the customers using which they can withdraw a small amount of money.
- When you get your next salary, you must repay the borrowed amount.
- A payday loan’s due date usually ranges between 2 to 4 weeks starting from the date you have borrowed the loan. The payday loan contract made with the lender mentions the exact date by which you need to completely repay the loan.
- You need to disburse the loan amount in the form of cash, cheque or prepaid credit card which would be deposit electronically into the borrower’s account.
- The processing and approval of payday loans are usually quite fast.
- The credit history of an applicant is usually not check by the lenders offering the loans.
- There lies no stringent policy from the side of the lenders as a requirement for applying for the loan.
- You being a customer need not provide a guarantor or collateral as security in order to credits following this scheme. This happens as payday loans are unsecured.
- Usually, the lender who offers the loan doesn’t verify the borrower’s ability to pay off the loan while he meets his other financial obligations.
- The risk associated with payday loans is extremely high as there is no guarantor or collateral associated with this loan type. Hence, a very high rate of interest is charge for this type of loan.
5 eligibility criteria for providing or obtaining a payday loan
- The customer should be an Indian citizen
- The minimum age of the borrower must be 18 or more
- An active current account must be possess by the borrower
- Customers should have an active contact number
- Customers should be having a job with a steady source of income
Additionally, we can be able to help you find no credit score check loans if you’d choose now no longer to have your credit score rating appear. Even though the various lenders we associate with are satisfy to look beyond a bad credit score rating.