It’s not uncommon that people who work the usual 9 to 5 job find themselves in predicaments where they are unable to afford their day to day expenses and bills may begin to accumulate as a result. When bills pile up, they become a lot harder to deal with overall and these people may find themselves struggling to relieve themselves from the debt while maintaining a regular lifestyle.
That’s why they may turn to options like a payday loan to make chopping that debt down a bit more realistic. A payday loan can be beneficial to borrowers in a multitude of ways such as relieving them from a crisis so that they can get things paid for on time; a payday loan may also help borrowers build credit if they keep up with their payments; and, if borrowers choose to renew their loan, they may get more assistance that can be put toward future bills while continuing to rebuild their credit.
What is a Payday Loan?
It varies from state to state, but typically a payday loan is for borrowers looking to get up to $500 to cover expenses. These loans can either be acquired in-store at a payday loan location or online depending on which state the borrower lives in. When it comes time to pay back the loan, the first payment can vary anywhere between 2 to 4 weeks from the time the borrower is granted the loan. Repayment options typically vary between auto-pay from the borrowers chosen checking account, debit card payments in-store or online, or cash at the lenders’ store-front.
What do lenders consider before granting a Payday Loan?
If you are looking to get a payday loan, the first thing you’ll want to provide is proof of your employment. Typically, payday lenders are interested in verifying how the borrower intends to pay the loan back, so they will verify your employment status as well as direct deposit frequency. They may ask for access to bank statements or printed copies, and this will help to determine the repayment dates for the borrower.
Payday loan lenders aren’t usually interested in a borrower’s credit score; they just want to be sure that you are capable of paying the loan back. Should that method of payment fail, they want to also verify that you have valuable collateral available to cover any unforeseen inability to pay. Some lenders may also be interested in any information that makes it easier to locate you in the event that payments are late.
How much does a payday loan really cost?
All loans come with their own set APR fees which are typically shown in percentages when borrowers are signing their binding papers. Payday loans can’t legally charge more than $100 in fees, and some do reach their cap in APR rates. Fees for payday loans can be well over $50 per two week payment period, so ultimately borrowers end up paying nearly 400% APR as opposed to the usual 12-30% with a standard credit card.