What is Payday Loans
From time to time, emergencies happen — your car breaks down, the roof on your home needs repair, or your kid needs expensive medicine for an illness. If you do not have sufficient money saved for emergencies like these, it may be challenging. Oftentimes, it is these kinds of situations that cause people to take loans out.
Payday loans are short-term loans generally around $1,500 that will help folks get through a rough spot. They’re known as payday loans because typically they are paid back on the next pay day.
How payday loans work?
Usually, when someone takes out a payday advance, it is typically a small amount of a few hundred bucks that’s due back within two to four weeks.
Then you will be asked to complete a form authorizing the payday advance company to withdraw the complete loan amount plus fees directly from your bank account once the loan is due. As an alternative, you might be asked to write a post-dated paycheck for the amount you’re borrowing, in addition to the loan fee. You may leave the paycheck with the creditor and they’ll cash it on the day indicated on it, which is within the next month.
In any event, the payday advance company will be able to recoup their money once the time comes. If you don’t have enough money in your bank account once the money becomes withdrawn, you will be charged a non-sufficient funds fee by your bank, which may be $45 or $50.
When you ask your payday loan, you will usually receive it in cash or as a deposit in your bank account. But in some instances, the lender may request that you take the loan out on a prepaid card, which might take an activation fee.
Myths about Payday Loan
- Myth: Payday Loans are Only for the Poor
Fact: Studies have shown that many people who get payday loans are middle class employees. Nobody is exempt from experiencing a financial crisis. Others are salaried employees and don’t have an increase in pay whatever the amount of hours they work. That’s the reason why a lot of folks turn to payday loans.
- Myth: It is Impossible to Pay Back Payday Loans
Fact: it’s a common misconception that people are duped into getting payday loans, and they can’t pay them back. However, there are agents who will be certain that you know everything you have to know about getting a payday advance. They don’t try to fool people.
Additionally, there are many different repayment options available. That’s the reason it is easy to handle your loan should you budget accordingly.
- Myth: It is Cheaper to Pay an Overdraft Fee
Fact: When a lot of people don’t have funds, they think that the best choice for them would be to overdraw their accounts. But most banks charge you $35 for each trade. You will just have to pay a single fee to get a payday advance.
- Myth: You Need to Have Good Credit
Truth: You do not need good credit to get a payday advance. In actuality, creditors do not even check your credit score. Lots of people with poor credit turn to payday loans because they couldn’t get accepted anywhere else.