Short term loans that are based on the pre-authorized bank drafts or the personal check of a borrower are known as payday loans. In order to get this loan, the borrower is required to provide a post dated check of the amount that is borrowed along with any fees or interest incurred on it.
Post dated checks are issued as they are a great way to ensure that the repayment of the loan will be received. This has made getting loans so convenient that many lenders have started sending money to borrowers’ account directly. The lender receives the entire amount along with interest on the pre-determined payday through the post dated check. If the borrower wants to roll over the loan for another pay period, then this can be done by paying the finance charges for the current period.
Requirements for Payday Loans
Getting Online payday loans is really easy; one simply has a bank account plus a secure income source and papers of personal identification. Payday loans will not require one to use credit queries or request the borrower a lot of questions just before deciding to offer the bank loan to any person.
Different Terms of Payday Loan
The payday loans are usually provided for a period of two weeks ranging from an amount of 100 to 1500 dollars. On an average, payday loans cost 470 percent interest annually. Short term loans have even higher annual interest rates. Besides this, finance charges ranging from 15 to 30 dollars per 100 dollars is also charged.
Where to Get Payday Loans?
Payday loans can be availed are various places such as:
- Check cashers
-Cash advance stores
- Pawn shops
-Rent to own companies etc.
Besides this payday loans can also be received through the internet as well as toll free telephone calls. According to the Centre for Responsible Lending, over 25 thousand payday loan outlets existed in USA which were lending out more than 28 billion dollars to its borrowers.
Internet Payday Loans
Getting payday loans on the Internet is convenient but much more risky than general payday lending. In this system, the borrower can apply for the payday loans online or with the help of faxed forms. Once the formalities are completed, the lender deposits the loan amount directly into the bank account of the borrower. Not only this, the amount of the loan along with the interest is also withdrawn electronically from the borrower’s account on the payday.
Risks Involved in Payday Financial products
Payday loans can be extremely risky if one is not financially responsible and secure. Bounced checks lead to negative credit rating as well as bounced check fees from the borrower’s as well as lender’s bank. Besides this, some banks even close certain accounts in case of too many bounced checks. This is done when the bank detects a trend or habit of a person to bounce checks to get what they want at a particular period of time.
Coercive Collection Strategy
Coercive collection strategies are used by many of the lenders these days on the loans that are based on the personal checks. Under this strategy, the lenders are capable of imposing criminal proceedings on the borrowers if they fail to pay the amount on time. Also, the lenders can sue the borrower for multiple damages, as per the civil laws on bad checks.
Find the best deal on instant bad credit payday loan. You can still get it with bad credit.