In an emergency, when one is in dire need of money, what does one wish for the foremost? That one could lay hands on the money as quickly as possible. But that is a little difficult. You may have run out of your last month’s salary and you have to wait a couple of weeks for this month’s pay. A bank loan is out of the question as the paperwork and approval would take ages. Moreover, the amount you actually need is too small for taking a bank loan. You can borrow from people close to you but if you have done that just last month, you wouldn’t want to impose on them again. Is there a solution? Yes, quick payday loans are the way out.
Quick Payday Loans – Meaning
A payday loan is a loan repayable on the next payday. It is an unsecured loan to be paid back from a salary. Just like employers sometimes pay salaries in advance to employees, payday loan lenders grant a loan to the borrowers which they will recover from the borrower’s salary. Payday loans can be got almost immediately as there is no cumbersome application process, no credit check, no documents to be submitted and the approval and actual receipt of the money is instant. Hence these loans are called quick payday loans.
Requirements for Borrowing Quick Payday Loans:
- The borrower should be above 18 years of age and a citizen of the country.
- He must have a regular salary income.
- He must have a checking account.
Features of Quick Payday Loans:
- These loans are short term loans.
- Quick payday loans can be applied online.
- The lender will not conduct any credit check on the borrower. So even a person with a bad credit history can easily avail of this loan.
- The lender may allow the option of paying back the loan in installments on successive paydays instead of a lump sum repayment on the next payday. For this facility, the borrower may have to pay a higher fee.
- The interest charged by lenders of quick payday loans is very high compared to that charged by banks.
- These loans are unsecured.
- The lender generally does not ask for any document. All the lender would want to know is the name of the borrower’s employer, date of joining the job and his monthly salary amount.
- These loans are usually borrowed by people with low salaries. The risk of default is very high as they may find it difficult to repay the loan.
- Quick payday loans are taken for small amounts generally ranging from $100 to $1000.
Drawbacks of Quick Payday Loans:
Payday loan lenders claim that they help people from low income groups by lending them money when they need it most and when nobody else is ready to help them. While it is true that these loans are easily available, the lenders may exploit this need by charging them exorbitant rates of interest. Also, easy availability may tempt even people who are not in urgent need of money to borrow quick payday loans. Borrowing may soon become a habit which would ultimately lead them to a debt trap.