Payday lending is a convenient way to secure additional money. When a financial crunch hits, it is not always easy to borrow from relatives or find collateral for a bank loan. Americans with lower income, who are usually rejected by conventional banking institutions, do have a way out. Payday loans provide quick access to extra cash with simple eligibility requirements. Moreover, with payday lenders gone online, you are now able to arrange a loan from home. You will cope with financial emergencies in no time and with no collateral required.
All you need is internet access, account details and identity documents. These are verified remotely – by reaching out to credit bureaus and alternative sources of financial data. If these return no matches (which may be true for recent immigrants or young people), you may still be given a chance if the lender conducts a manual review.
Applications from citizens with little or no credit history are turned down by traditional banks with their rigid assessments for long-term borrowing options. Payday lenders, however, enable such Americans to build up positive borrowing record, and even applicants with bad credit history may still be offered a second chance.
Microcredits are quick – sign the agreement, and the amount may be deposited into your account on the next business day. The lender will only ask for a direct debit permission or a post-dated check – to withdraw the amount you owe on the due date. For reliable borrowers, the cost of payday lending does not include any daunting fees.
Peculiarities of Payday Loans
The only case when these emerge is when a customer defaults on their repayments, and even these cases can be avoided with rollover options. The law obliges payday lenders to disclose all their charges and even APR (the interest for a one-year payday loan). What is most relevant, though, is the simple interest rate, given the short-term nature of credit borrowing. With a 14-day loan, each $100 borrowed may cost $15 (15% simple interest rate), and early repayment usually entails no extra charges.
Sometimes, they even prove less costly than the alternatives. For instance, falling behind with payments is always risky. With rising overdraft fees, incurring extra charges for bounced checks is hardly reasonable. These will rapidly add up, having a detrimental impact on your credit record. Similarly, a failure to pay a parking ticket will entail penalties, while payday lending allows you to avoid mounting fines.
Repeat payday borrowers are offered lower interest rates, and timely repayment of several loans is certain to improve your overall credit history. Hence, payday loans bring multiple benefits to customers who manage their money wisely. More accessible than other types of lending, they help millions of Americans to improve their lives.