There’s a good chance you’ve already heard of these types of advertisements in some form or another like the radio, the daily newspaper, and on the internet. Need fast cash until payday? Get quick money within 15 minutes! Sounds familiar? Let’s just say these types of ads are everywhere. Today there are many companies offering to make “payday loans,” “check loans,” or “payroll advance loans.” These are all just different terms for the same type of loan transaction.
To pay back a $300 loan, the average payday-loan pays a total of $800. The reason being is because of the steep fees. These payday loans are marketed as short-term loans to be paid back within 2 weeks. If the borrower is unable to pay back the loan within the 2 weeks, they are faced with these crazy interests on the loan.
Payday loans may be helpful, but remember, only consider payday loans when you are having temporary cash flow problems or are facing a financial emergency and need money on a short-term basis. Always try to pay your loan in full when it matures. If you are unable to cough up the cash, you should make every effort to pay at least part of the amount financed before you renew the transaction.
Payday loans work like this:
- Usually an application is required from the lender. Other items are also required such as paycheck stubs and some form of photo ID like a driver’s license.
- You sign the loan agreement, write a postdated check to the lender, and receive your money on the spot.
- The lender will hold on to your check until your loan payment is due – usually 2 weeks. The lender then deposits your check unless you have already repaid the loan in full.
Payday loans have to be repaid all at one time. If not, you’ll be forced to renew the loan and you’ll be faced with high interest rates. This is part of the agreement when you sign the papers.
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