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The Payday Loan - A Short Term Solution

Apr 10, 2008
It can happen when you least expect it. A car breaks down, you get sick and get behind on your utility bills due to missed work, or some other financial difficulty comes up without warning. This is where short-term loans and payday loans have been a great help to those who do not have savings or available finances to deal with the unforeseen difficulty. In fact, payday loans have become a widely used option for people who only need a cash advance or a loan to deal with short-term situations when they arise.

A payday loans is type of loan that is granted based off a borrower's future income and is repaid out of the next paycheck received. For those who qualify under the terms of payday loan companies, the process of obtaining the money is simple. You simply give the lender a check that has been voided out and includes the full amount of the loans and the fee for processing the transaction. In turn, the company give you the loan amount, but minus the percentage of the total processing fee.

If you want to receive a payday loan, you will have to provide the company with different information to qualify. Take a look at the following common requirements:

* All payday loan companies ask for your Social Security Number.
* The borrower must be eighteen years old or older.
* The borrower must have an active checking account that has been in service for a minimum of three months.
* The majority of lenders also require that the borrower maintain a regular balance in their bank accounts. The amount necessary will vary according to each payday loan company's policies.

Besides these requirements, a potential borrower's ability to obtain a payday loan will be affected by other factors. In some cases, these factors will make the borrower ineligible. It is important to have a clear idea about what sorts of factors contribute to this outcome so that you may know whether you would qualify for a payday loan. Knowing this ahead of time can save you the trouble of filling out an application.

Here are some common reasons people are denied a payday loan:

* You already have outstanding payday loans
* You have only recently opened a checking account
* You are unemployed
* You haven't worked for at least five months at present job
* You have filed bankruptcy

You should never forget that payday loans are intended to deal with immediate problems like paying off past-due bills, small medical expenses, auto repairs, rent, etc. They are by definition, small and short-term financial solutions. If you used them for anything more, you could get into trouble since the fees can quickly add up putting you in worse financial peril than you were at the start.

Payday loans can be a life-saver when you are caught off guard by life's surprises, but they are should be used on a limited basis and never relied upon for longer than it takes to pay them off with your paycheck.
About the Author
Joe Kenny writes for Rebuild.org, offering payday loans, personal loans for any purpose loans from vacations to auto finance.
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