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How do payday cash advances work?
Payday cash advance loans are essentially short-term loans that may use a borrowers paycheck as collateral. Working individuals who are mainly dependent on their paychecks for money may occasionally find themselves in a spot where an emergency requirement arises and the next paycheck is still far away.
In such instances, lenders offer cash advances to adult individuals with an assured net income of at least $ 1000 per month. The loan amount is to be repaid by the borrower in full on the next payday. Cash advances charge a rate of interest of up to 20% and should ideally be taken in small amounts so that they can be repaid easily. The high rate of interest is charged as these loans are short term and given without a credit check. Most lenders offer a first-time payday cash advance of up to $1000.
The process of applying for and obtaining a cash advance is automated and can be carried out online. The borrower is required to submit a short application, which is usually replied to via email. The money is transferred to the borrowers account upon the signing of the loan agreement and submission of postdated checks. Alternatively, the lender can directly withdraw money from the borrowers account on the designated due date. Inability on part of the borrower to pay the loan in full may imply a violation of the loan agreement which can prompt the lender to demand non-sufficient funds (NSF) costs. If a lending agency chooses to refer a borrowers poor payment record to the credit bureau, it can harm a persons credit score and affect his chances of obtaining a loan.
Ideally, a person should refrain from taking payday cash advances often as these incur a high rate of interest. They should be kept as the final option when loans from friends cannot be availed and credit cards cannot be used. Factors that affect the approval of a payday cash advance include federal and state lending regulations, net income, and existing previous payday advances or other loans. Usually payday cash advances are scheduled for payment 15-18 days from the application date. Individuals can avail only one payday cash advance at a time from a given lender.
Lenders allow for an extension of the payment date and deduct an extension of payment fee on the original due date. There is a limit to the number of extensions allowed by the lender. Most allow up to four extensions of the payment date. The next scheduled date for repayment is usually the date of receiving a paycheck.
Payday loans – what you need to know about payday loans.
When you couple this with the rising cost of everyday expenses like food, it isn’t hard to see how the budgets across America are stretched to breaking point. One of the key problems that people have today is they don’t know where to turn whenever disaster or emergency strikes.
The answer to this question more frequently than ever is that they are turning to payday loans. Almost 40% of Americans are less than two months away from bankruptcy. The savings rates in America are at an all-time low and many households don’t have any savings at all.
Quite the opposite, they are drowning in debt and their stock portfolios and property portfolios have lost an incredible amount of value. This is reflected in the type of customers which now approach payday loan companies to help in times of financial difficulty.
Many people think that they are generally people on the bottom rung of society’s ladder. This couldn’t be further from the truth. The vast majority of payday loan customers are middle-class Americans. 44% of them their own homes and 42% of them have a college education. They are predominantly under 45 and have a family to feed.
That means if a household loses an income provider, they must replace that income within eight weeks or face the real prospect of losing their home, their car and all their possessions. In order to try and prevent this fate befalling millions of Americans, payday loan companies have stepped into the breach.
They will lend money with no regard to your previous credit record and in fact your previous credit record and will not even be checked. In addition, the transaction is never reported to credit reference agencies.
The money they will forward to you is simple, fast and easy. After a two-minute application, typically made on a website, the money is forwarded to your checking account in say 24 hours upon acceptance within a couple of hours. The main conditions for acceptance are that you have a job, a checking account and are over 18 years of age.
Once the payday loans company has verified these simple facts, your money is deposited. Once you get the money, you agree a date with the payday loan company and the money is withdrawn dramatically from your checking account on the date on which you specify.
This normally coincides with your next pay cheque date. In most cases, the time limit for a repayment is around 14 days. This means that this type of loan isn’t available to remodelling your kitchen or buy new toys.
It is genuinely and specifically designed to help you in an emergency. If you have a problem and you need urgent cash with very few questions asked and no reference to your previous credit history, the ideal solution for you could be payday loans.