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What's the Deal with Payday Loans Anyway?

Jul 25, 2008
There has been considerable debate over the years regarding payday loans. But we cannot deny that payday loans are an important resource for people to get money in a hurry.

A payday loan is a short term loan (usually only for a couple of weeks), and a payday loan allows people to borrow money till their next pay check arrives.

Citizens in our country and other countries as well, have taken advantage of these loans. Payday loans make up nearly $25 billion in the U.S. alone.

Some people think that payday loan companies are out to get the small guys. Individuals that usually apply for payday loans are hard pressed for cash and are willing to agree to nearly any APR to get it.

But on the flip side, payday cash loans are helping people with no, or bad credit. It is not fair to compare a payday cash loan against a regular loan with a regular APR as payday loans are meant to be for short periods of time.

To see this comparison here is an example:
A $500 payday loan usually translates into a returnable amount of $650 after two weeks. This indicates the interest rate resulting in an APR of almost 700%.

Both the lender and the borrower know that this loan is meant to be short and that this is just a statistic. And most payday loans are for small amounts as well, usually no more than $1500.

As sad as it may be, most banks are not willing to offer customers a loan for small amounts like $500, so payday loans are important. Additionally, not everyone has good enough credit ratings to apply at a loan or financial institution.

Credit cards are a great way to make ends meet but usually end up getting people in trouble more quickly.

Another advantage of a payday loan is the fact that the borrower doesn't usually have to offer any collateral or security to be approved for a payday loan.

There have been certain restrictions on payday loans by the U.S. government but they are still a great source of financial assistance for many Americans.

Payday loans are fair and the interest rates are not the horrid numbers that critics make them out to be. Once you know the numbers, you are able to see the reality of the situation.

The best thing about payday loans is the ease in which one can apply. There is not any collateral, as mentioned earlier and there is not a load of paperwork.

People with poor credit ratings can apply and be approved much easier than at a bank or financial institution. Money can usually be given within just a few short hours as well.

The one thing needed for a payday cash loan is proof of income. If you want the money direct deposited, you need to provide proof of a bank account as well.

The representatives at the business you are applying at are usually very helpful with any questions you may have about your loan. They want you to understand what you are doing so there are not problems in the future.

If you decide to avail a payday fast cash loan over the internet it is even easier to attain. All documentation is done over the internet and once providing proof of a bank account, the money can be deposited quite quickly.

The advice I have for people looking for a loan online is to compare and research. Usually if someone has had a bad experience, they will have posted it online. Be careful and spend wisely.
About the Author
Michael New Jr. is an authority in the financial industry. He has written hundreds of articles relating to consumer services and Payday Loans.

Contact Info:
Michael New Jr.
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