Sunday, July 1, 2018

How Payday Loans Work: Getting a Payday Loan

money for urgent needs
If you’ve ever found yourself in an unexpected financial trouble, you will appreciate how valuable it is to have someone you can turn to for immediate financial help.

Sometimes that someone is not an actual person but an institution. Often, it is a short-term lender such as a payday loan lender.

Payday loans can be a lifesaver. They are small short-term loans that people with a verifiable regular income can take with the commitment that they will repay the amount due on their next payday.

Payday Loan Terms

Depending on your income level, the payday loan amount you can qualify for will generally range from $50 to $1,000.

While the term of the loan is very short, the interest charged on the loan can be very high. If you are in a financial fix, however, the high interest rates may not register as a negative. It will be the price you will be paying to get the loan as soon as you want.

You will be required to make the repayment once and in full. Usually, payday loan lenders get all the information they need to facilitate a repayment such as your bank account details or a post-dated check from you before they disburse the loan.

In some states, it is legal to roll over payday loans. If that is the case in your state, you have the option of extending the loan. I would advise against doing this, though, as it may result in a never-ending cycle of debt.

How to Get Approved for a Payday Loan

Most payday loan providers now offer services online. You can get a payday loan from the comfort of your own living room by just filling in a form on the net.

Before you take a loan from a given lender, search online for reviews of the lender. If there aren’t any reviews, you will probably find web articles comparing the terms of that lender to other lenders.

Your search should lead you to the best payday loan lender for your situation. Whether or not that lender chooses to give you a loan will depend on their eligibility criteria.

It is pretty easy to qualify for a payday loan. If you have a verifiable regular income, you will probably qualify for a loan. The details you need to pay attention to include:

i. Age: you have to be at least 18 years old.

ii. Income: you should be able to prove that you had income in the past 3 months.

iii. Employment: most lenders lend only to those who are employed. If you are a casual worker, you should do some research and find local offline payday loan providers that lend to people like you.

iv. Credit: you can get a payday loan with a bad credit score. Nonetheless, some lenders might limit how much they give out to people with bad credit scores.

To increase your chances of being approved, you should consider obtaining your credit report and submitting it when applying for a payday loan. If you have a good credit history and are employed, almost all payday loan providers will consider you a good customer.

It is important that you limit the number of applications you submit. Do not be tempted to submit several applications with different lenders at the same time.

Every application will probably be incorporated in your credit report as a loan inquiry. If there are several inquiries, you may lower your credit score.

Developing a Healthy Relationship with Payday Loans

When used responsibly, payday loans can be a useful tool to get over unexpected financial hurdles.

In the wrong hands, payday loans can lead to the formation of very bad financial habits. Since some states allow lenders to roll over their loans, some lenders find themselves in a habitual cycle of debt.

Such a habit is not healthy if you have goals of attaining financial independence. The habit may also lead to a poorer credit score which can affect your ability to land long-term loans.

You should strive to repay your loan as soon as it is due. Below are some of the steps you can take to ensure that you have the cash to pay off the loan when it is due:

i. Suspending unnecessary monthly subscriptions: if you have monthly subscriptions that aren’t a necessity such as Netflix, magazines, online courses, and cable, you should consider suspending them until you have your payday loan repaid.

ii. Generate more cash: you can increase your cash flow by working more hours (overtime) at your job or by looking for a side-hustle to generate more cash.

iii. Sell things you don’t need: if there are things in the house you don’t use but which could be sold on sites such as eBay, you should consider selling them. This is one of the quickest ways to generate cash to help you avoid the cycle of payday loan debt.

iv. Cut costs: you can make a few lifestyle choices that can save you some money over the course of a month. Something as simple as carrying packed lunch to work instead of eating at restaurants can save you more than a hundred bucks in a month. Three or four similar lifestyle changes can get you all the money you need to pay back the payday loan.

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