Many Financial Institutions Are Getting Into Payday Loans
Payday loans, sometimes called paycheck advances or cash advances, are small, short-term loans. (Don’t confuse this “cash advance” with the term used when you borrow money against a prearranged line of credit. They are far from the same thing.) These payday loans do not require a credit check and are typically for amounts smaller than $1500. This kind of loan is normally to help the borrower “get by” until their next paycheck when money is tight.
How you go about getting payday loans is simple. The simplest way to receive payday loans is to give the lender a post-dated check, which will include the money borrowed plus interest. The borrower will get cash in return and the lender agrees to hold the check until the borrower’s next payday. On the date indicated on the check, the lender can process it normally or electronically withdraw the money from the borrower’s checking account.
Today, you can find lenders that offer payday loans everywhere. Most often, they work out of small stores. However, even large banks and financial service providers have begun offering various forms of payday loans.
A new variation on payday loans may be available from your regular financial institution! Check with your bank and see if they offer something like a direct deposit advance! If you have your paychecks electronically deposited in your checking account each payday, your bank may offer to give you a small payday cash advance. When you get your next paycheck deposited, the bank will withdraw the amount you borrowed plus the agreed upon fee for the service, which falls somewhere between 10-20% normally.
A twist on payday loans may be available through your tax preparation service. Many of the services have begun offering refund anticipation loans to those they prepare taxes for. They’ll loan you a fixed amount and then it will come out of your tax return later, plus their fee.
There are also many lenders online willing to offer you payday loans. It requires you fill out an online form, give quite a bit of personal information and then you will either be approved or declined. Most are approved and you will quickly have money in hand through wire transfer or other available methods.
Be careful who you choose to receive payday loans from. Shop around and look at many lenders before choosing the one you wish to use. Some charge much higher rates for their services, which will cost you money in the long run. Also, be prepared to pay back the payday loans immediately after your next paycheck arrives. If you fail to pay it back, hefty charges can be added to your loan and you can end up paying much more than you planned.