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Bottomline: What Exactly Payday Loans Are

Written By onci on Tuesday, October 1, 2013 | 8:27 AM

Bottomline: What Exactly Payday Loans Are
If you are finding yourself short of money this month or facing a large unexpected bill you cannot afford then you maybe looking a payday loans as a solution to your short-term financial problem.

This type of lending has grown in popularity in recent years as many people find banks unwilling to extend over drafts or lend small loan amounts.

Payday loans are similar to asking your boss for an advance on your wages and are also known as cash advance loans. They can provide sums between $100 and $1500 or maybe more, over short periods such as 14 to 31 days or whenever you are next paid. They are designed as a short-term borrowing solution for anyone who needs money in a hurry.

Applying for a payday loan is as easy as visiting a lenders website and filling out a short application form. Once approved the loan can be in your bank account within 24 hours. Unlike traditional bank loans the application process is simple, there is no faxing of documents required and many lenders do not require a credit check to be carried out.

The lack of credit checks has made this form of lending accessible to those who would ordinarily be turned down for a bank loan or other forms of credit due to a poor credit history.

Payday loans have come in for much criticism because they are seen to be lending to people who cannot afford to repay them, especially because the lack of credit check allows anyone with a regular income to borrow money. This has led to speculation that poorer members of society will only increase their levels of debt and can even result in bankruptcy.

However, this has also been clarified and explained that these things are wrong notion about payday loans. Payday loans only let us borrow some small amount in order to meet both ends when we are financially trap.

Borrowers also need to be aware that these loans carry high interest rates, typically around 2500% APR, much higher than bank loans or credit cards. However, this rate applies to loans borrowed over 12 months, meaning that the amount of interest charged on a loan borrowed over a few days or a couple of weeks will be small and often far cheaper in comparison to traditional bank loans.

Compare to traditional loan, these loans are easily availed and no more hassle.

As well as applying for a loan online you can also visit lenders in high street offices and apply in person. Usually you will receive your loan in cash and may be required to repay it in the same way.

Which ever way you apply do shop around for reputable lenders and the best deals in much the same way you would a traditional loan. You can use these loans for any purpose, but it is advisable to use them to meet unexpected expenses rather than for living expenses.

When it comes to repaying the loan do make sure you have enough left to meet your financial needs for the following weeks.

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