Most of us experience situations where we realize that we need some extra cash in the middle of the month when the money which the paycheck brought in is almost exhausted. And no, this does not happen only to spendthrifts who indulge in unnecessary spending but also those who are extremely careful with their money. Events occur beyond one’s control such as breakdown of the car or an urgent household purchase. It would be ridiculous to apply for a full-fledged loan at such a time; a low fee payday loan is the perfect solution.
A payday loan taken at a low fee is called a low fee payday loan. The fee includes interest as well as processing charges.
Traditionally, payday loans were given by small money lenders and at pawnshops. With the advent of the internet, online borrowing of a low fee payday loan is popular. The processing of an online loan is much quicker. Online lending has also helped people in need of money to get payday loans at a lower fee than what was available earlier. This is because-
- Borrowers can now research online and choose lenders whose fees are low.
- With a large number of people entering the lucrative business of payday lending, stiff competition has forced the fees down.
Features of a Low Fee Payday Loan
- Generally, a person applying for a low fee payday loan does not go through a credit check. But if a borrower with a bad credit history is finding it difficult to get a payday loan, he can opt for a ‘bad credit payday loan’.
- An identification proof, proof of employment and a checking account are all that is required on the part of the borrower. The lender does not ask for any other documentation.
- Once the loan is approved, money is usually deposited into the borrower’s checking account within a period of 1 to 5 days. If the borrower wants cash deposited on the same day, it can be done but there will be an additional fee.
- Loan amounts ranging from $100 to $1000 are usually granted. A lender of a low free payday loan first ensures that the borrower earns at least $800 to $1000 per month and only then lends the money.
- The due date for a low fee payday loan is usually after two weeks or the next payday.
- In case of an online transaction, the loan amount will be repaid by debit card. In case of an offline transaction, the lender usually demands a post-dated check while lending the money.
- Different lenders follow different policies. One lender may not grant an additional low fee payday loan to a borrower if he has other unpaid payday loans. Another lender may extend the payment date for a borrower who is unable to pay the money on the due date. He would however charge an additional fee.
One should opt for a low fee payday loan only in an emergency. Though the interest rates of these loans have come down, the APR i.e. the annualized interest rates of these loans are very high compared to normal bank loans. For instance, for a loan of $100, the fee can be as high as $30. So these loans should be taken only in exceptional circumstances and should not become a habit. The borrowers of these loans are usually from low income groups. If they start taking these expensive loans on a regular basis, they will soon be deep in debt. Each paycheck will be used for repaying a loan leading them into more poverty.