Payday Loans Explained

There are times that we need cash for emergency purposes and that’s the main purpose why it is advisable to put up an emergency fund before you invest the rest of your money.

One of the best ways to get an emergency cash loan is through your credit card cash advance. However, if you don’t have credit card or if you have reached the maximum credit limit, then you can resort to what they call payday loans. Payday loans are short-term loans with some ranging from fifteen days or less. In simple terms, payday loan is basically a loan of cash that is taken against the consumer’s next paycheck.

Generally, payday loan companies require that the consumer or client must give a post-dated check of the amount of the loan plus a surcharge called interest, which they withdraw from the account of the consumer on his next date of salary payment. However, there are also some agents of payday loans in which they require your payroll ATM card to be a collateral against your loan so that every payday, they get to withdraw your salary equivalent to the payment amortization plus interest charges on your payday loan.

Before you avail of any pay day loans, you must conduct a thorough research on the payday loan company where you are availing of a short term loan. The additional surcharge / fee charged by different payday loan agencies are different. Look for the one offering the lowest. It is very important for the consumer to go through the features, terms and conditions before choosing a payday loan agency.

What are the features of payday loans that makes it one of the best resource of emergency cash? Let’s enumerate them below:

Quick Cash: When an emergency need arises, payday loans instantly provide the extra cash to cover these sudden expenses.

No credit check: Unlike the procedure of other personal loans such as housing loans or car loans, payday loans do not require a credit check or credit apparaisal to be performed; thereby making it easy for people with a poor credit history to acquire a loan.

No formalities: While all the other types of loans demand a lot of paperworks and formalities in documentation, payday loans don’t have these hassles. Simple personal details such as name, age, residential address, employment ID, savings bank account details, etc. are essential details to provide when availing of payday loans.

As a final remark, I would not advise you to be dependent on payday loans because you will definitely be trapped in rat race. Whatever you earned through your job will be spent immediately without you even touching the money you’ve worked hard. Discipline yourself in terms of handling your finances and just resort to payday loans if you are in dire need of cash which are in extreme instances. However, if you cannot avoid payday loans, you can find instant payday loans here.

Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

13 responses on “Payday Loans Explained

  1. It is like borrowing your money from the future or using your future money. If you can make it grow its a smart decision but if your just using it for expenses, better ask advices or think.

  2. Relying on payday loans is a bad credit habit. But for people who are trapped by their bad spending habits that make their pockets dry – payday loans will treat the defect in the short-run. Hmmm. How about for those people who are not employed? Do they have something like this?

  3. Using payday loans is setting yourself up for a bad habit and a costly one as well. Do whatever you can do to avoid this – beg, borrow or exist on ramen noodles for a week!

  4. Well…there are good and bad for payday loans. There’s actually a risk and a bad habit. It’s not for everyone, especially for those who are not disciplined. I have seen people getting payday loans just to pay off debts.

    Anyway, there are still smart ways to leverage payday loans, although it must be well controlled. One way is to place it in a low risk financial vehicles that gives returns more than the interests of the loans.

    For me, I’ll have some loans that I can afford and place it in programs that can generate passive income more than the interest of the loans.

  5. Most of the payday loan afficionados are trapped in this kind of system. For un registered individual who offered payday loan , most of the time has higher interest rates than legal salary loans company. Its really important to educate people on financial education

  6. Payday loans are huge scams and you really shouldn’t be involved in borrowing against your own future cash flows. I know that in certain situations it is applicable, but over 90% of the people that apply for payday loans are in situations that they shouldn’t be in regardless.

  7. I thought that we can get loan for few few hours a day or perhaps it should be usually a most convenient for everyone can easily take and repayment duration should be larger…

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