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Payday Advance Helps You with Your Short-Term Financial Needs
A payday advance is a form of borrowing that falls in the category of no collateral short-term loans. It is also referred to as salary loan, payday advance loan, or cash advance loan. In order to be eligible for a payday advance, you must be able to show proof of your employment and salary.
Once your payday advance is approved, the lender will transfer the funds into your account in an hour or so, although some transactions may take 3 days or 72 hours to process. Although there are different turnaround times for the payday advance loan, it is still one of the most popular short term loans in the market.
A Quick and Instant Solution
Many people turn to payday loans when they suddenly fall short in their budget. It happens to the best of us – you hit a snag in your budget then you realize that your payday is several days away.
The advantage of getting a payday advance is the fact that you can get financial aid when unexpected expenses come your way. You won’t have to pay fees and late charges from your bank since you have the money from a payday advance.
Another benefit of getting a payday advance is that you can conveniently apply for a loan from your home. The application usually only takes a few minutes, and once the process is complete, the money will be available in your account by the following day. If you’re lucky, you will be able to receive the funds in your personal bank account in a few hours after loan approval.
Speedy Approvals Means Convenience
There are several advantages of taking out an online loan, such as a payday advance. You get to enjoy a quick and simple loan application process, speedy approval and transfer of funds. If you are looking to apply for an online loan, you simply have to go online to find a suitable lender. Compared to regular lenders, you will be able to search and compare the loan products of different online lenders that will match your needs. Another advantage of getting a loan online is that you can work on the application from your computer at home or at your workplace. You should remember, however, that in order to qualify for a payday advance, you must meet the requirements such as:
- You must be employed in the last three months prior to applying for a loan.
- You should also have an active checking account, at least three months old.
- Your minimum net income must not be lower than $800.
Having a regular source of income is one of the most important requirements of payday advance loans. You should also have a checking account that allows you to issue checks to the lender. Without the following requirements, you will have difficulty obtaining a payday advance. This type of loan product is specifically suited to people earning a stable income. Due to the nature of the loan, it will be quite impossible to access a payday advance loan.
A payday advance loan does not require any form of collateral from the borrower, hence, the only guarantee that a lender has is that the borrower has a source of income. The lender will want to make sure that you earn a decent salary amount which will allow you to settle your loan on time.
Honesty Works in Your Favour
A payday lender will request for your most current bank statement and payslip. Compared to other lenders, payday loan providers will not look up your financial report or score from a credit agency. However, this does not mean that the lender will not inquire about your outstanding loans and credit card payments from consumer information agencies. Note that they may also into the status of your bank account and the non-payment or late payments of your financial obligations.
In order to avoid rejection, make sure that all the information you supplied is true and correct. It is also not advisable to apply for several loans at one time.
Imperfect Credit History
Many people are hesitant to apply for a loan because of the status of their credit score. Payday advance loans are designed to help borrower fill the gap in their budgets. There is no need to go to a loan shark who offers quick loans but slap you with sky-high interest rates and fees. You can also dismiss the urge to go to your local bank to apply for a loan since, unlike traditional financial companies, an online lender will not ask any justification for your loan application.
There is no law that states that a borrower needs to explain or justify the reason for borrowing. This means you can use the money to pay for your wedding, settle your child’s tuition fee, or pay for a dream vacation. Take note, however, that due to the very nature of payday advances, you must settle your loan by the next salary date. There is usually no option to roll over your borrowing to subsequent months.
Cost of debt: What to expect
Payday advance loans are convenient sources of funds when you need them as soon as possible, but a word of caution: expect that the cost of a payday advance to be high. The convenience of this borrowing has a hefty price tag and this translates to the fee of the lender. Lenders offering high-risk forms of borrowing compensate themselves by charging higher rates. This is a reality in the lending industry all over the world.
The fees of a payday advance loan are calculated using an APR or annual percentage rate. The APR is used to measure the cost of a loan whether it is a payday loan, mortgage, or credit card. It is applied annually or on a yearly basis. Below is an example of how APR is computed:
- Payday advance loan amount is $400
The lender applies a fee of $50 to the loan and payments should not be received beyond 14 days. To find out the APR of the loan, you need to divide the fee of $50 by the loan amount of $400 which yields 0.125. You will multiply this result by the number of days in one year or 365, so 0.125 multiplied by 365 days will give you 45.625. Divide this amount by 14, the number of days of the loan term — 45.625 divided by 14 is 3.2589. Take the result, 3.2589, and multiply by 100 to get the APR. The annual percentage of the loan is 325.89.
Another harsh reality of payday loans is the fact that this type of loan can leave you in a never-ending cycle of debt if you are not careful. There are numerous online providers which have established a good reputation for years and can offer you a more reasonable payday advance loan. When you deal with an unlicensed loan provider, you will not only be charged with exorbitant fees, you may end up having no or very little legal reprieve should you have any complaints. Consumers are protected by state laws by limiting the total fees lenders are allowed to charge their clients. Government authorities also require all licensed loan providers to supply comprehensive loan product information to their clients.
Protection for Borrowers
Different countries and states have different legislation when it comes to online lending. But government regulators normally require all lenders to inform and explain to customers the APR of their loan.
Payday advances are quick and convenient forms of borrowing that allow you to get immediate funds and pay the debt by the next payday. As long as you can provide your employment information and justify your source of income, you can be eligible for a payday advance loan. Yes, even borrowers with poor credit can take advantage of this loan. Before agreeing to any loan contract, you should fully understand the stipulations including the loan APR. Consumer protection agencies regulate and control lenders and their services, but it is still your right and responsibility to protect yourself.