FAQ about Payday Loans
Many consumers are curious about payday loans but they don't know what they are or how handy they could be. For this reason, we offer this collection of frequently questions asked:
What's a payday loan anyway? With proof of employment and a level of income that will cover repayment, a person can borrow a small loan against their paycheck. The lender expects the loan to be repaid at the time of a borrowers next paycheck. Some loans even include a post-dated check written by the borrower to the lender in the agreed upon amount, which will include a fee for the loan. That fee can be as low as $10 per $100 borrowed up to $50 per $100. Consumers should look for the lowest fee they can qualify for. Payday loans are convenient, easy to qualify for, and are not dependent on credit history. In fact, most payday lenders won't even check an applicant's credit.
Can anybody get a payday loan? Just about any U.S citizen eighteen or older with a job and a checking account can get a payday loan. Having a bad credit history or having other debts outstanding don't matter. About the only thing that would stop an applicant from getting a payday loan is if, 1) they have a pattern of abusing payday loans by not paying them or by bouncing checks, or 2) by not being honest when they filled out their application. Information provided on an application is verified, as is whether or not a checking account is active.
What are payday loans used for? That's entirely up to the borrower of a payday loan! Unlike many traditional loans which want to be nosy and get into an applicants business, asking what the loan will be used for and so on, payday lenders know that adults have their own reasons for needing money. They are hardworking people who don't need a babysitter, they just need a loan. More often than not, payday loans are for emergencies, but what constitutes an emergency is a borrower's business, not a payday lender's. For one borrower it might be a car payment to stave off a repossession. For another it might be an electric bill that has doubled up and the lights are about to be turned off. But for another, it might be that money is tight when a child is about to celebrate their sixteenth birthday. Again, payday borrowers are responsible adults. Just because they don't make as much as a Rockefeller doesn't mean payday lenders have the right to ask lots of personal questions.
What's the most I can borrow? Well, it depends on two things: 1) Whether a particular payday lender has limits in a certain locale or state, and 2) how much an applicant makes for a living. Some payday lenders loan up to $1,500, depending on circumstances of the borrower. Some payday lenders limit their risk to loans of up to $500. But the good news is that there are many more payday lenders than there once were, so check with more than one and see what their limits are based on the earning qualifications of an applicant.
When do payday loans have to be paid back? Commonly known as the term of a loan, this is the amount of time before a loan is due to be paid. For payday loans, the term of these small loans is usually the time from when it is paid to an applicant to when that applicant gets their next paycheck. Sometimes, this period of time can be extended in what is known as a "rollover." In a rollover, rather than paying the loan back when agreed, time is extended to give a borrower the chance to pay it a little later, as agreed upon by the payday lender. If a rollover situation occurs, there would be a fee associated with that extension.
