It is the middle of the month and you have an immediate medical expense, a heavy one. Your monthly salary is already spent and you have no savings. A bank loan is of course out of the question as the need is urgent and the amount is also not so huge as to warrant a loan. If you are racking your head over how to arrange for the money, don’t worry, you can borrow short term payday loans.
What are Short Term Payday Loans?
A payday loan is a loan to be repaid on payday from the salary which you have received. The pay you will receive is itself a security for this loan. These loans are for short terms, usually for just a couple of weeks and that is why they are called short term payday loans.
Some Facts about Short Term Payday Loans
- Short term payday loans are borrowed by people from low income groups who often find that their salary is not enough to meet their monthly expenses
- Since most of the borrowers are not well off financially, they find it difficult to repay the loans. So the risk of default of short term payday loans is very high.
- The lender charges a very high rate of interest to offset the risk involved in granting these loans. The APR or the annualized percentage rate of interest works out to be very high for the borrower.
- Many state governments in the U.S. Frown on these loans as they believe that short term payday loans are exploitative in nature as they charge very high interest and fees. While some states have formulated strict regulations regarding the amount of the loan and the interest to be charged, other states have banned short term payday loans outright.
- These loans are of small amounts ranging from $100 to $1000.
- There is no paper work involved when applying for the loan. A simple online form asking for the borrower details such as name of employer, date of joining the job and salary is all that needs to be filled.
- Unlike other loans, the loan approval is immediate. This is because there is no credit check done. Even with a bad credit history, one can apply for and easily receive short term payday loans.
- This is the best option for a person who needs money immediately as many of the payday loan lenders grant the loan money on the same day it is approved.
However, borrowers should ensure that borrowing short term payday loans does not become a habit. Instead they should budget their expenses and even keep some money aside for emergencies. This way they can avoid these high interest loans or at least the frequency of taking these loans. If they borrow these loans just because they are easily available, on payment day, they will find it difficult to repay the loan along with the interest. They may have to arrange for funds to pay this loan and this will find them again in financial difficulty.