Payday loans have been gaining popularity in the United States for many years and the growth continues to expand.
How it works?
A payday loan is a short-term loan that someone will apply for that will give them immediate cash bridging the gap until their next payday. Payday loans are generally not large amounts of money but more of short-term borrow. The amount offered on a payday loan is typically based on the earnings of the borrower and normally does not require collateral. Payday loans are a good way to prevent bounced checks and prevent other types of financial hardship.
There are many advantages to payday loans. One of the most important advantages is the speed and promise of immediate cash for an immediate emergency. Many of the payday cash companies will promise a quick turnaround generally within 24 hours. Many of the companies that provide payday loans do so 7 days a week instead of weekday banking hours like other financial institutions. The application process is generally much easier with applications taking as little as five minutes to complete. The requirements to apply for a payday loan are generally less than a traditional bank.
Some of the typical requirements include being 18 years old, having a government-issued ID, being regularly employed, and having an active bank account. Generally, payday loan companies will only allow loans up to a certain percentage of your payday checks which makes it easier to repay when payday comes around. Credit checks are not used, unlike a typical bank loan. Not requiring credit checks allows people with not-so-good credit the opportunity to get a loan without hassle. Another advantage without requiring credit checks is a payday loan won’t hurt your credit score since there isn’t a credit pull involved with these types of loans. Payday loans are considered unsecured loans which means, unlike a traditional loan a borrower would not have to put up personal property as collateral to be approved. The advantage of not having this requirement is if a borrower does not fulfill their obligation of repayment they won’t lose their personal property such as a car or house. Payday loans do not have restrictions on the use of the loan money so the loans can be applied to any type of debt or purchase. Payday loan companies are unable to give personal or banking information to other companies which keeps your information secure and private.
Payday loans have their place in the modern financial system. These types of loans provide relief to individuals who are in a financial crisis and need some help before their next payday. Many states have enacted laws that protect consumers from extremely high-interest rates to make these types of loans more beneficial to consumers. Payday loans bridge the gap to the next payday and will always have a place in modern society.