Category: Borrowing

Borrowing

What Are Payday Loans and How do They Work

During our life time, we encounter numerous events that may leave us needing some extra, emergency cash. Unfortunately, not all people have it at the moment of the emergency, which is the main reason why many choose to borrow money.

However, the process of borrowing money may turn out to be quite difficult in case you have a bad credit score, or don’t have much to give as collateral for banks, which is why numerous payday lending providers have appeared in regions from all around the world. In fact, in the United States alone, the payday loan industry brings in about $40 billion per year worth of profits, which is quite understandable, considering the fact that people are in constant need of extra cash. While the fees are a bit high from time to time payday loans have proven to be an efficient solution in getting people the cash they need, quickly and easy, without much hassle, especially in the event of an emergency.

In this article, we will explore more about payday loans, how they work, their advantages and why you should consider getting one for yourself.

The main purpose of payday loans

Payday loans have been designed for people who are in need of some extra money before they get their next pay check. This makes payday loans a quick and easy way to get some extra money, which can then be used to take care of any emergency that may appear. Before anything else, it is important to keep in mind the fact that payday loans only give out small amounts of money, typically ranging from around £50 up to £1,000. Anything more than that would require you get an actual loan, so the process will be somewhat more complicated.

The process

Understanding the process of getting a payday loan represents the first step towards success if you ever intend to use these services. Most companies have physical stores, where you can walk in, submit your documents and get your loan, whereas others conduct their operations online, or via telephone.

1. Contacting the provider

Once you have decided that you would like to get a payday loan, you’ll have to look for a provider that fits your description, and has taxes that are compatible with your actual budget. Emu.co.uk is a good example of this. Once this happens, simply get in touch with the provider, either by going to their store, online or by telephone.

2. Submitting your documents

Most applications consist of a couple of documents, including banking information, employment information and contact information. If needed, the lender may also ask for some data on your friends and family, which they can call in case you refuse to pay back your loan.

3. Writing a loan check

Once your documents are approved by the payday loan company, you will have to write a check to the lender, outlining the amount of money that you would like to borrow, while also pleading that you will pay the amount due, alongside with the afferent taxes before a certain date.

4. The lender will proceed to deposit the money in your bank account

Once all of the formalities have been dealt with, the lender will proceed to deposit the sum directly to your bank account, or even give it to you in cash, depending on the agency. Deposit times vary. While some agencies may deposit the funds instantly, others may take about a day before giving you the funds.

5. The lender holds your check and then cashes your account

During the period of your loan, the lender will hold and take care of your check. Most payday loans last for 2-3 weeks, or even more, depending on the agency. Once the time is up, the company will proceed to cash out the sum from your bank account. In case you don’t have the money needed in your bank account, you have the possibility to ask for an extension that is usually in the range of 14 days. Do keep in mind the fact that this will most likely incur an extra fee that you’ll have to pay once the term is up.

Conclusion

Based on everything that has been outlined so far, getting a payday loan is both easy and convenient, as long as you afford to pay back the sum and tax, before the term comes. Not only this, but some payday loan providers are also open 24/7, which means that there is almost always an agency that you can go to, at any time of the day, in case you have to deal with an emergency. Payday loans are also perfect for those with bad credit, as agencies rarely require a credit check, given the small amount of money being borrowed to clients.