A payday loan is a short loan that is due on the borrower’s next payday.
It is also referred to as a check loan or cash advance. Typically, these loans are meant to fund unexpected expenses that come up before the end of the month.
The features of payday loans
1. The loans are available in small amounts.
2. You have to allow the lender to have access to your checking account. You can also write a check for the for the money you owe in advance so that the lender can cash it when the loans its due.
3. Payday loans are typically due on the next payday.
Some payday loan features vary. That is why it is very important to go through the details of a given payday loan package before you decide to go for it.
Are payday loans expensive?
Payday loans are a expensive. However, they are not too expensive when compared to some traditional loan options when you pay them off as expected. Charges can quickly mount if you do not repay your loan on time or when you decide to roll over or extend the loan. What started as a very small loan can grow rapidly into a significant amount. People who campaign against payday loans always say that lenders target vulnerable borrowers. They do not do proper check to determine whether a borrower is capable of paying the money back before giving out the loan.
The pros and cons of payday loans
1. You only need a steady income, an ID and a checking account to qualify for a payday loan.
2. They are available to people with poor credit. Most payday loan lenders do not check their client’s credit scores.
1. They are expensive
2. They do not provide a long term financial solution.
3. Some payday lenders are not honest.