Payday Loans Are Unsecured Personal Loans
Payday loans and cash advance loans are personal loans that carry no security. Don't be surprised when searching for unsecured personal loans if you come across many sites offering payday loans. Usually people arrive at these sites searching for unsecured personal loans with longer repayment programs with several installments to repay the loan. If you are searching for these loans, make sure to include that fact on the search field or you will be directed to payday loans too.
Payday Loans Carry Fixed Amounts
Though you can request the amount you need, there is always a range that you need to respect, usually payday loans offer a minimum of $100 and a maximum of $1500 or $2000 at most. This means that if you need higher amounts you should resort to other forms of financing. You can always request more than one payday loan (from different lenders) but the repayment of two payday loans at the same time can be a bit complicated and onerous.
Payday Loans Charge Fees Rather Than Interest Rates
To make things simple for applicants and probably to disguise the fact that the interest rates charged for these loans are too high, payday loan lenders promote their payday loans featuring a fixed fee every $100 or $1000. For instance, you can see on newspapers advertisements or on the internet offers stating to charge only $10 every $100 borrowed.
This implies an annual percentage rate of 120% which is overwhelming. Yet, since these loans carry short repayment programs, they make sense for emergencies. An unsecured personal loan with a longer repayment program and that rate would be simply abusive.
Payday Loans Are For Emergencies
Given the characteristics of payday loans, these financial products need to be used only for emergencies. They serve this purpose very well because there are no credit checks and the money can be deposited into your account by the next day without hassles. These cash advance loans however, can´t be used as a regular source of financing because the interests or fees accumulate easily creating and building up debt uncontrollably.
Payday Loans Require No Credit Checks
There are no long credit verification processes on payday loans and therefore, your credit will not be an issue. This implies however, that the lender will assume the worst and thus, the charges will be high enough to compensate the risk that defaulters represent. Understand that you are not only paying for the risk you represent but also for the others' as the others are paying for yours too. This may sound unfair but it's the only way creditors cover for the risk they take.
Conditions For Qualifying For Payday Loans
In order to qualify for a payday loan there are basically two simple requirements: you need to show proof of income with copies of your paychecks or tax presentations and you need to have a bank account where the money will be deposited. If arranged, the amount owed plus the fee will also be debited from that account.
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