Payday Loans: How Does This Type of Financial Loans Work?

Your car just broke down and you can not work without it? Many financial organizations offer you the opportunity to have it repaired before your employer falls on you.

How? Thanks to the payday loan that gives you the opportunity to quickly receive the money you need.

 

The payday loan

This is a short-term loan and with high fees. This makes this means of borrowing very expensive.

In most cases, you can borrow an amount ranging from 30 to 50% of your net salary. The maximum amount that can be borrowed is $ 1500.

This type of loan was designed to help people deal with an unexpected event before their next payday. Its goal is not to pay rent, shopping or an energy bill, because this loan must be repaid as soon as the next payment is received.

 

The advantages of this type of loan

The payday loan allows you to quickly get a sum of money. A convenient way when you need to repair your vehicle or your washer is broken. You can deal with these unforeseen circumstances and repay this loan as soon as your next payday arrives.

 

The cost

Be careful, this type of loan is particularly expensive for its borrower because the interest rate charged often exceeds 60%. It is therefore important to ensure that the repayment will not be a financial embarrassment in the months following the loan.

 

Information to be provided

Payday lenders will ask you for several proofs to validate the request:

  • Regular income
  • A bank account
  • A permanent address
  • A form authorizing the borrower to withdraw the amount at the end of the due date
  • A post-dated check corresponding to the loan amount with fees
  • Additional fees in case your payment does not pass

It is important to be sure you can repay this loan because the fees are high and you could quickly find yourself in an uncomfortable situation.

 

The repayment of the payday loan

The repayment of your payday loan is automatically done with the money of your next pay.

If you are unable to pay back your payday loan, then several consequences can come into play:

  • Additional fees from the lender
  • Fees from the bank if your account is not funded
  • An accumulation of fees and interest on the total amount
  • The lender can contact your family, friends or employer to reach you
  • The lender can sell your loan to a collection agency and write it down in your credit report
  • The lender can sue you
  • The lender can seize your property
  • The lender can seize the money from your paycheck

 

Payday loan: an emergency solution in the event of unforeseen circumstances

The payday loan is, therefore, a quick solution to get money when an unexpected event occurs. Always check your repayment capabilities so you do not end up in a delicate situation.

 

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