Unfortunately, we’ve all been in a scenario where we’ve owned money at some point, whether it was for a drink at the bar or a loan to pay for a trip; the concept remains the same. If you have a debt, you will ultimately have to pay it off. Unfortunately, many individuals are struggling to obtain stable work and pay their obligations at the end of the month due to shifting pricing and a volatile economy. Even if payday is still a long way off, you may find yourself in need of a few hundred bucks to get you through the month. Many people turn to payday loans as an option to fund their costs until their paycheck arrives. However, these instant and short-term solutions come with a few disadvantages most people are unaware of. What are payday loans, where do you get one, and what are the interest rates are some of the questions you need to ask before getting the loan. Therefore, we summed up some quick facts to keep you informed on the matter, so read the text below to find out more.
What are they?
Payday loans are usually loans with extremely high interest, a short-term debt given by collectors to individuals in need of cash or money in a short amount of time, without having to give any collateral or valuables to the one giving the loan. These loans are usually given according to your personal monthly income, and they are often called predatory loans as they essentially are unsecured short-term loans, a sort of personal loan. The collector, the individual giving the loan, bases the amount on your wages, your income, and your ability to pay it off. They usually require access to your bank account, or card account whether it is prepaid or union. This way, they have the authorization to access and write off the amount of money they own.
Why are they called predatory loans? The catch with payday loans is the high-interest rates, as the collectors are relying on these rates and there is the reason why these loans are unsecured and do not require any collateral. These interests can vary depending on the total sum of money taken by you, and vary from 10 dollars to 100 depending on the loan.
Another way the collectors acquire money is via check; they normally ask you to write a check for a specified amount, including the loan plus interest rates, and they’ll cash it whenever you are paid.
How to get a loan?
As said, payday loans are fixed and usually, the one giving the loan requires the loan to be paid back in one sum, therefore the interest rates are usually fixed flat rates and not changeable. For example, on a loan of 500 dollars, the provider can ask for a fixed interest of 50 dollars. This stays unchanged whether you pay it off early or not. Now, where do you get a loan? Payday loans are usually given away by small store providers, who simplify the whole process for you.
They usually do not require any credit history, background check-ups, or any sort of collateral, and that is why the rates are high. You can even get a loan online by online merchant providers, so find out more at www.facethered.com, and the whole process might take a few minutes. You fill in an application form on the site and the only thing they might require is a piece of paper (pay stubs) as the physical confirmation of every paycheck you received over the course of the year. Another thing to consider is whether you need a bank account or not.
Fortunately for the borrower, a bank account is not necessary, and the loan may be obtained without one. A prepaid account, rather than a bank account, is required by most merchant lenders. The lender will assess whether or not he or she can grant you a loan and at what interest rate depending on your pay and income, all of which are dependent on your projected income.
Are you protected?
There have been numerous attempts in the past to regulate the interest rates on payday loans and financial laws are put forward to that exact purpose. However, pay loans lenders are still a grey area, a category usually labeled as an exception, and therefore these loans are only a short-term solution to a problem. These loans, due to their high-interest rates should only be taken under consideration to cover some expenses, and the downside is the lenders are not required to take into account your ability to pay it off. They can hire a collection agency to get the loan from you, and this can only add to the debt you have as the agency requires a fee for their services. These loans are seldom forgiven, or written off, therefore make sure to pay them as soon as possible.
These loans are only there if you happen to need emergency cash and do not have any other means of requiring it, therefore make sure to make them a last resort.