Payday loans are unsecured, short term, usually small loans, offered with terms which can be compared to those of street loan sharks.
They are dispersed by check cashers and small finance companies with astonishingly high interest rates and carry excessive fees. Payday loans are also called cash advance loans or check advance loans.
Terms and fees.
Payday loans are for up to 14 days. In order to get a loan one must have a pay stub as proof of employment, a checking account and often a verifiable address and a phone number. You write a check to a company extending credit to you, and the company will cash it on your next pay day. The cost of a loan is between 15 to 30 percent, sometimes even higher, which translates annually into paying hundreds if not thousands of percent in interest. In addition to extremely high interest rates, cash loans often carry very high loan origination fees. They are also easily extendable for the next fourteen day period, with a charge of the fees mentioned above.
Payday cash loans offered online.
In the age of electronic fund transfers and online banking, more lenders are offering payday loans online. You usually have to fax paperwork to the company, and, if approved for a cash loan, the money is wired (additional cash wire fee) to your account within 24 hours.
Are cash loans your only choice?
Companies extending these kinds of loans tend to target people with
poor credit scores who are unable to borrow somewhere else. Before making
a decision, consider the following options:
a pay advance from your employer.
getting overdraft protection from your bank.
taking a cash advance from a credit
card.
paying some bills late (preferably after talking to the creditors).
If a payday loan is your only choice, make sure you understand the terms
hidden in fine print and are aware of all the fees. As with any other
money borrowing, there are laws protecting consumers.
Find out more about payday
loans and how to file a complaint against a dishonest lending
company.