How do Payday Loans Work Online
A payday loan is a loan for a short period of time where the lender extends credit of high interest which is based on the income and credit profile of the borrower. The principal of the payday loan is paying a portion of the paycheck of the borrower. These loans have a high rate of interest for short-term credit. These loans are also called check advance loans or cash advance loans.
What is Payday Loans Online?
You can get these payday loans from the payday lenders at the storefronts. You can go to any physical establishment for a payday loan, where you will need to give a postdated check to the lender covering the amount of the loan along with the fees.
This loan can help you manage your immediate expenses till the next payday. These loans are usually for small amounts, more often of $500 or even less.
Getting this payday loan online is similar to getting a payday loan from an establishment, the only difference being that the transaction s carried out online instead of the physical establishment.
Working of Online Payday Loans:
It is not difficult to find lenders who offer payday loans online. For being able to qualify for the payday loan the lender might require permanent resident status or US citizenship, and the age of the borrowers needs to be 18 years or more. Some of the information required during the process of applications is
*Your address, name and contact information
*Information about your employment and income and also the information about the next payday.
*You might need documents to verify your income
*Your account numbers and the checking account.
These payday loans online approval is quick. There is no credit check most of the time. You can get the funds in the next business day into your bank account through the direct deposit.
Apply with Caution:
It is important to be cautious when applying for a payday loan online. As these loans are available at high interest rates, it is important that you find out the different rates and apply accordingly.
Payday loans charge fees which range from $10 to $30 for $100 borrowed. This works out to your paying $240 extra if your borrow $200 as payday loan and you are charged $20 for every $100 borrowed. This means, you will be paying an interest rate of almost 260%.
You also need to keep in mind, that on the payday you will be running short of $240 as loan and fees. This might be difficult if you are living from payday to payday. You might have to borrow more to tide over the month.
These payday loans are expensive and are in no way long-term solutions. There are chances that you are not earning enough to pay off the additional fees when you opt for the payday loan. You might get into a debt-cycle with this loan. These payday loans can work only if you are in an emergency situation and have no other means of finance.
