Payday loans are short-term loans that are sometimes called "paycheck advances." They are designed to give the borrower cash right away in exchange for a promise to pay back the loan on their next paycheck. Most of the time, these loans don't check your credit, so they're great for people with little or bad credit. But a steady job with a guaranteed paycheck is more important. Because of this, payday loans are usually not given to people who are self-employed or whose work schedules change often.
If you are approved for a payday loan, you will probably get cash in exchange for a check with a future date that is for the amount of the loan plus interest. Most of the time, the lender will cash the check on the next pay day of the applicant, unless other plans have been made. For instance, the payday lender could offer the borrower the chance to refinance the loan instead of cashing their check. A lot of payday lenders will let their customers do this for an extra fee and interest.
There are a few national companies that offer payday loans, but most lenders are locally owned. People might need payday loans for a lot of different reasons, not just because they are short on cash. There are things like unexpected car or home repairs and trips to the doctor. It can be hard to make it from one paycheck to the next, and when things come up, many people find that payday loans are the only way to get cash quickly. When you get a payday loan, you can use the money to help pay for groceries, gas, electricity or other utilities, insurance, or other things you need.
As was already said, getting a payday loan is a pretty easy process. All that is needed are copies of previous paychecks or stubs, proof of current employment, wages, and the length of time the applicant has been working. All of this information is important to figure out how likely it is that the person will be able to pay back the loan as agreed. Since credit checks aren't usually done, the best way for payday lenders to make sure someone is who they say they are is to check their employment. In addition to the documents listed above, most payday lenders also require a photo ID and a checking account with a check made out to the payday lender.
People who take out payday loans are encouraged to pay them back in full as soon as they can. If you don't, fees and extra interest will keep adding up until the amount you owe is much higher than the original loan amount.
