Payday loans are the loans that are given for a very short period of time to ensure that they will be paid back as soon as the next salary or income from their source of earning. These loans have a very high interest rate and are called by different names like payday advance, payroll loan, payroll loan, small dollar loan or cash advance loan. A payday loan can be offered to anyone regardless of their credibility. The bank does not see the creditworthiness of the borrower in the case of granting this type of loan as it is granted for 15-20 days only and is not long term. However, the borrower must keep in mind that getting a payday loan will not increase his credibility in the market. However, he must have a stable income, a permanent bank account and a minimum of 6 months work experience to avail this loan.
Online payday loans are becoming more popular these days. One of the best things about an online payday loan is the simple application process. It takes less than 5 minutes to complete the application and the portal is usually open 24 hours a day. The borrower can simply apply for the loan online and the funds are transferred via direct deposit to the borrower’s account. The loan repayment in such case is electronically withdrawn directly from the borrower’s account after he has received his next salary or after the post-dated check is due. The list of direct payday lenders is as follows:
- cash checks: They submit their approval application within 5 minutes by submitting loans online or at their US offices
- CashAdvance.com: They offer online payday loan once the customer is approved by checking their valid account and not any prepaid or savings account.
- Central cash: This is one of the oldest payday lenders in the country with a 24*7 online application portal.
- Loan: This also provides the customer with an approval response within 4 minutes of the completed application form. It is one of the largest of its kind in the country.
- Blue Trust Loans: It funds loans ranging from $300 to $1,250 in nearly every state. With a repayment period of approximately 6 months.., there is no penalty for these loans to pay off.
- the lion: They offer loans to almost every state in the country with varying rates and terms in each state. It has loan programs available to consumers in all credit score ranges.
- net credit: Provides instant approval decision with no first-time borrowing limits. Applicants are eligible for loans of $1,000 to $10,000.
- Maxlind: They have many different loans and conditions and credit worthiness is not a criterion taken into account. Offers personal loans of up to $1,300.
There are some jurisdictions that determine the amount of interest charged on loans including payday loans. Depending on the method used, the Annual Percentage Rate (APR) for each loan may vary. In the United States of America, for example, the Uniform Small Loan Laws (USLL) set the APR between 36% to 40%. The main advantages provided by these types of loans provide great profitability for the industry, as well-being is increased for families as people who do not need short-term loans can easily benefit from long-term loans and provide a service that is not available in the market as per the requirements usually of the loan by people who have exhausted all other options to purchase short-term credit. This type of loan is also criticized by some people on the grounds that they drain money from low-income communities by charging exorbitantly high interest rate. Also, in some countries, the collection practices of lenders are very aggressive unlike in countries like the United States where there is a standard collection practice defined by law.