Payday loan companies, or cash
advance lenders, are specialist lending organisations, who lend money to people
who need relatively small amounts of cash very quickly and for short periods of
time. The term payday loan comes from the fact that such loans are normally
given on the condition that they are paid back immediately on the borrower's
next payday.
These cash advance lenders
specialise in helping people out when they find themselves unexpectedly short
of cash, usually in unforeseen emergencies or when facing unexpected bills. The
loan is literally just to tide them over until they next get paid. For this
reason, the criteria for getting a payday loan are slightly different to most
other longer term types of borrowing.
The most important thing the cash
advance lender wants to know is that you have a job and a steady income. If you
can prove that, then it usually does not matter if you have a bad credit record
or even court judgements against you. Apart from this, most lenders will
require you to be over 18 years of age and a citizen or resident of the country
you are applying from. There are many online payday loan companies now, which
have fast application processes that mean you do not need to fax through any
documents or evidence.
Payday loans should not be seen as a
solution to ongoing debt problems. The last thing you want is to get into a
situation where you have to extend the lending term on a cash advance loan
because you can't pay it back. Because payday loans are designed to be very
short term, the charges and interest rates that apply if they are taken out for
longer can be very heavy indeed. If you take out a payday loan and default on
it, you will quickly see the charges building up and could soon find that the
interest due is more than you originally borrowed. You should not take out a
loan unless you are really sure you can pay it back on time.
When looking for a payday loan you
should always look for recommendations and compare the charges that will be
applied. In the US the charges are often dictated by the state in which you
reside, so will vary depending where you live. Some states prohibit payday
loans and all states that do permit them issue licenses, so always check that a
payday lender is properly licensed for your state. A surprising number of
companies operate illegitimately without licenses.
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