By Kristy Annely
A payday loan is a short-term loan offered to customers by some lenders. It is also called a cash advance, as it is cash provided against a prearranged line of credit. Payday loans help borrowers take care of their expenses until their payday. People use this source of funds to cover small, unexpected expenses as it helps avoiding costly bounced-check fees and late payment penalties. It is usually of a minimum amount of $500 and can go up to a couple of thousand dollars. They are intended to bridge the borrower's cash flow gap between paydays. Payday loans are typically offered without a credit check, as the amount involved is comparatively less and the duration of the loan is short
Most payday loan lenders operate as small stores or franchises. Some large financial companies provide loans that are a variation of the payday advance concept. For instance, there are some mainstream banks that offer a direct deposit advance for customers whose paychecks are deposited electronically. Income tax preparation firms also partner with lenders to offer refund anticipation loans to tax filers.
Before finalizing with a pay loan lender, it is important for a borrower to research extensively and compare the offers from different lenders. The single greatest advantage with a payday loan is that borrowers do not have to go through a credit check. It is possible to get a payday loan sanctioned even if the borrower has a bad credit record.
The process of obtaining a payday loan is very simple. Customers have to fill out an application form with basic information queries related to their job and income. The loan amount sanctioned would depend on an applicant’s income. The lending company would evaluate what amount the borrower can comfortably pay on the next payday and sanction an amount based on that. It is prudent for a borrower to pay off payday loans as per the schedule, to avoid paying excessive interest
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