The payday loans may be short-term loans. Emergency payday loans is a small loan with a high interest rate. The maximum amount that you will borrow is $ 1,500. The maximum amount that you will be charged is $ 15 per $ 100 loan bracket. Generally, you will have to pay the loan the next day.
How does payday loans work?
Payday loans get their names because they are usually due the next day for the borrower. It differs from regular bank loans in many ways:
1. small quantity
In most states, where payday loans are legal, there are limits on the percentage you will borrow this way. This limit ranges from $ 300 to $ 1,000, with $ 500 among other things. The Pew report says that the normal size of a loan Quick money is $ 375
2. Conditions will be shorter
Payday loans will be used as soon as the next salary is received. In most cases, this indicates that the loan period can be up to two weeks, sometimes up to one month.
3. No installments
With a normal loan, you pay in cash. For example, if you borrow $ 1,000 for 5% annually, you will pay $ 85.61 per month - $ 2.28 for interest. Therefore, the rest depends on the manager. But with a loan on the day of payment, you must pay in full - interest and principal - directly. This is not possible for borrowers on a reasonable budget.
4. High attention
When you borrow money from a bank, the interest you pay will depend on the credit rating and the type of loan you receive. Excellent credit borrowers can obtain mortgages at annual interest rates of three or less. On the other hand, people with bad credit and getting unsecured consumer loans will pay 25% or more, but payday loans will be charged to all borrowers at an equivalent rate - usually at $ 15 per $. 100. For example, if you borrow $ 500, you have to pay $ 75. This won't be so bad that you remember that the loan period is no more than two weeks. The annual interest rate is 391%.
5. No credit check
The bank will check your balance before submitting the loan for a percentage. If your balance is definitely not good, you will not be able to receive it at least. But you don't have to have honest credit or credit to motivate you to get a payday loan. All you have to do is check and prove income accounts. (Like a thin heel) and an identification card stating that you are at least 18 years old. You have to go with your money in an hour - and this is a good reason these loans attract financial desperate people.
6. Automatic payment
When deleting a payday loan, you check the signed check or other documents that give the lender the right to withdraw money from your checking account. If you do not appear to have paid the loan as planned, the lender will collect a check or withdraw money from your account.
7. Simple accessories
If you know that you are unable to repay the loan on time, you will arrive ahead of schedule and renew. You pay enough fees for accrued interest and can save you two weeks by paying special interest. Or in countries that don't allow this, you will immediately delete the second loan to hide what you owe in the main account. This is the reason that many users buy the initial month as a two week loan.
Common features of payday loans include:
1. Small amounts of credit and many countries run out of their instant money loans. The amount of $ 500 may be a general limitation for a loan even though some restrictions exceed this amount and lower.
2. Payday loans are usually paid during a single payment on the day the next salary is paid to the debtor or when receiving income from other sources such as pensions or social security checks. The due date usually takes two to four weeks from the date of the loan. Legal rights under the payday Loan Agreement
3. When repaying the loan, you will write a full request for the future date, including the fee. Otherwise, you will need to authorize an electronic debit from your check or financial institution account for deposits or prepaid cards. If you don't pay the loan on or before the due date, the lender can take a check or withdraw cash electronically from your account.
4. Lenders that provide payday loans generally do not consider your ability to repay the loan while trying to meet other financial obligations.
5. You can borrow money by check or cash, deposit it in your account electronically or charge an open balance in advance.
Other features of the loan may vary. For example, payment loans tend to be structured to pay for a single payment. Some state laws allow lenders to "refinance" or "renew" a loan when it expires. Therefore, buyers only pay the loan fee and cause the lender to extend the due date. In some cases, payday loans can be structured to be paid in installments for a long time.
The cost of payday loans
Many state laws set the maximum payday fee amount from $ 10 to $ 30 per $ 100. Two-week express cash loans at $ 15 per $ 100 correspond to an effective annual rate of only about 400 percent compared to The annual interest rate of a credit card may vary from about 12 percent to about 30 percent in many states that allow credit card loans. Payday loan, loan costs, fees and the maximum credit amount will be the most.