In recent years, the popularity of quick cash payday loans has been on the rise. This surge in popularity is partially due to wider access. Over the past decade, many states have finally decided to legalize this form of consumer lending products.
Cheap payday loans generally appeal to a wide variety of consumers, since it is a short-term remedy to a financial hardship. However, payday loans can also become problematic for many consumers.
How Cash Advance / Payday Loans Work
It might be difficult to understand why a cheap payday loan might pose a risk for a borrower. Ideally, the loan is paid back in a prompt manner, which means there will be no additional fees or late charges. However many people do not pay their loan back on time, leading to a significant fiscal problem. Payday loans actually go by several names, including: fast easy payday loans, cash advance loans, check cash advances, cheap payday loans, and quick cash payday loans.
The fees associated with a quick cash payday loan are stated in advance to the consumer. Federal and state regulations require lenders to explicitly cite their fees and all possible charges in their contracts with the borrower. The fees associated with fast easy payday loans make good sense to most consumers, since the cost of those loans is typically smaller than the late fees that the consumer is trying to avoid. For example, if you borrow $100 in the form of a quick cash payday loan, you can expect the corresponding fee to be about $18. The fee for a cheap payday loan isn't really that much, if you regard the fee as a service charge for a convenient short-term solution to your financial burdens.
If you are borrowing the money to avoid late fees, bounced checks or utility reconnect fees, then the fast easy payday loan product can be a real blessing to the borrower.
Assuming the borrower repays their loan on time, the lender will only charge one small fee for the duration of the loan; the typical duration is roughly one to two weeks (the consumer repays the debt on the day that they receive their next paycheck). However, if a borrower does not pay their loan back on time, the borrower will face additional fees.
Are Fast Easy Payday Loans A Blessing Or A Curse?
When a consumer takes a quick cash payday loan for the purpose of covering a short-term financial shortfall, the loan works out to be a blessing for the consumer. However, if a consumer chooses a fast easy payday loan to help manage a long-term financial problem, the payday loan can actually make a difficult financial situation much worse than it would have been without the payday loan.
Payday loan stores and companies offer their loans based on a very short window of payback. As stated previously, most fast easy payday loans are written for a term not to exceed two weeks. The finance company does expect to be paid in full when the borrower receives their next paycheck, hence the term "payday loan."
A payday loan company or store expects to be paid in full upon the borrower's next payday. If a borrower requests an extension to the following payday, the borrower will be required to sign a new contract, which will in effect double the borrower's finance charges or loan fees. Granted, if you need to push the loan out just one more paycheck, the extra fees that will be incurred may not be that big of a burden. However, if you take this same principle out five to six paychecks, then the consumer's loan fees could easily bypass the amount of the original loan.
By following this example, one can easily see how a simple low-cost loan could spiral out of control, putting the consumer in a position that would be difficult to bring back under control.
The Dangers Of Using Quick Cash Payday Loans To Address Long-Term Financial Problems
If a borrower were in a deep financial crisis when they begin a fast easy payday loan, it would not be very hard for them to get into a financial nightmare that will be extremely difficult to escape. If the borrower was in a financial hardship before they began the payday loan cycle, it is feasible that he or she will not be able to repay their loan promptly. Perhaps the consumer's financial ruin began with a miscalculation in the monthly budget or when an additional emergency situation followed their first financial crisis, and now the borrower is forced to extend their debt beyond their original agreement with the lender.
It is important to realize that the fast easy payday loan must be regarded in the same way as any other debt. Since payday loans utilize a loan fee as their service charge, delaying the repayment of your cheap payday loan can be expensive and financially catastrophic.
Your quick cash payday loan fees could literally double every two weeks, until the loan is paid in full. Thus, what used to be a small service fee for a financial emergency solution can double, triple, and quadruple in just a few pay periods. It all depends on how long it takes the borrower to repay their debt.
It is strongly recommended that you do not use fast easy payday loans to:
* Pay for unnecessary purchases,
* Pay for ordinary financial responsibilities,
* Pay on credit card debt,
* Pay off other payday loans, or
* Try to solve long-term financial problems.
Some borrower's find that they need to make one big payment that cannot be covered with a single quick cash payday loan. So, they take out multiple payday loans in the same month. This also is a recipe for disaster.
Fast easy payday loans are meant to be a short-term solution to an emergency situation. They are not meant to resolve bigger problems. Quick cash payday loans should not be used casually.
These short-term loans are very cheap if you utilize them to carry you to your next paycheck. They can still be very cheap if you need them to carry you through two paychecks. But, once you get beyond your second paycheck, cheap payday loans stop being an inexpensive financial product. The longer a consumer allows a payday loan to roll over, the more expensive the loan will become.
How-To Prevent a Quick Cash Payday Loan From Becoming A Burden
There are many common sense tips that can help you to avoid the worse case scenario shown above, in regards to a quick cash payday loan that you might take.
First, it is important to approach fast easy payday loans in a responsible manner. Try not to borrow more than you can currently afford to pay back. Borrow only what you need to manage your immediate monetary problem. Also, work hard to stick to the date you agreed upon in the loan contract, which you signed. By following this plan, you can avoid any rollover fees on your loans.
How-To Prevent Yourself from Needing To Use a Fast Easy Payday Loan
The most common reason consumers find themselves in a financial quandary is because they consistently overspend, with little regard for establishing and maintaining a budget. The best way to avoid the difficulties of late payment fees is to create a monthly budget. If you meticulously prepare and adhere to a budget every month, you will avoid overspending and you will find that you will have all the money you need, when you need it.
If you feel that you need assistance with planning a budget or if you need help managing your finances, there is consumer credit counseling services in every state. Someone there can help you develop a debt repayment plan and monthly budget to help you to keep your financial situation stress free. To find a consumer credit counseling service agency near you, go to the National Foundation For Credit Counseling (NFCC org) website.
In Conclusion...
Quick cash payday loans can be a beneficial solution for those who adhere to the conditions they agreed upon with their lender. For the person who only needs a few hundred dollars that they know they can pay back immediately upon their next paycheck, the fast easy payday loan is a godsend.
Thursday, October 18, 2007
Quick Cash Payday Loans Simplified: Responsible Borrowing Tips
Using Payday Cash Loans to Build-New or Repair-Bad Credit
Believe it or not, having no credit is just as detrimental to getting a loan as having really bad credit. Neither alternative shows potential lenders a history of payments being made on time, which is the determining factor in being approved to borrow money. In fact, monthly income is almost irrelevant if a person has no proven history of repaying their past debts.
This can be very frustrating for someone who has just begun their first job. People in this situation often wonder how they can build up their credit rating if they are unable to get credit at all. That's a great question! One of the quickest and easiest ways to build new credit is by taking advantage of payday cash loans.
To qualify for a payday cash loan, a person must be an American citizen, have a checking account, and earn a certain amount of steady income. With these three criteria, almost anyone can be approved for this type of loan. Applications can be done in person, over the phone, online, or even by fax, making them very convenient as well.
The reason payday cash loans are good for helping build credit is because the term of the loan is usually no more than two weeks. Because of the short loan term, a person could have many opportunities to borrow money using this type of credit. If the borrower repays each loan on time, this could be an excellent way to develop their credit report and to start proving they are financially responsible.
Payday cash loans can also be used as one of the steps in repairing bad credit. If a person has had trouble making payments on time in the past, a few payday loans that are paid back on schedule, can instantly improve their credit rating. After all, these loans will be the most current transactions shown on the credit report. Establishing any kind of new credit, and being responsible with it, is a great way to show lenders a borrower may be worth a second chance.
Other steps to take in building up a bad credit rating may include closing out credit cards that aren't being used. If a person has too many credit card accounts, even if some of the balances are zero, this can have a negative effect on their credit rating. Lenders must use any credit available to potential borrowers when figuring debt-to-income ratios. If these ratios lay outside the lender's guidelines, new credit may not be granted.
Paying any bill past its due date is also something to avoid, as is flat out non-payment. If a person hasn't made timely payments in the past, it is pretty likely they won't in the future either, at least that is the view taken by most lenders. Now is the time to make sure all payments are current. It is never too late to make this financial goal a reality.
Applying for a lot of new credit is also a bad idea when trying to repair past credit problems. Every time a lender runs a credit check on a person, it affects their credit rating negatively. Besides, the last thing a person needs who already has credit problems is more credit.
Having a good credit rating is very important. Even the best financial planners cannot avoid the unforeseen circumstances that affect people every day. For instance, if a person's car dies, they can either repair it, or buy another one. If that person has bad credit, or even no credit, they may not be able to make either choice. Lenders will probably not approve a new car loan, and most mechanics don't have layaway plans. Without a working vehicle, a lot of people may not be able to get to work, complicating the matter further.
Unfortunately, ours is a credit-based society. Having bad credit or no credit at all, can prevent a person from buying a home or even getting their utilities turned on. Unexpected problems can turn into unsolvable ones without the extra cushion that good credit provides. So, whether a person is just starting out, or they have stumbled along the way, it is imperative to continue on the path towards good credit. Payday loans could be one of the steps needed along this journey. This quick, inexpensive loan could easily help propel a person into a brighter credit future.
The Payday Cash Advance Loan Industry Delivers More Financing Options to Consumers
The cash advance payday loan business model is very popular these days due to simple mathematics. Payday cash loan lenders are willingly offering quick payday loans that other traditional lenders are completely unwilling to provide. This has enabled payday cash advance loan companies to tap into a huge market of consumers who have been ignored by traditional lenders for decades.
One reason for this is that traditional banks generally have a minimum amount that they are willing to lend to customers. This amount varies from lender to lender, but generally no traditional lender is willing to offer a $300-$500 loan. So if you are a consumer that needs a small short-term loan, a bank is not the place to go for help. Banks do not do small loans like this because they simply do not make enough profit from lending small amounts of money. If banks provided such small loans on a large scale they would begin to lose money hand-over-fist. Imagine if a bank gives a $500 loan and charges 5% interest. The bank would only make $25 from this transaction. Alternatively, if a bank provides a $5,000 loan with a 5% interest rate, they would make $250 on the loan.
Banks are in the business of making money and are accustomed to crunching the numbers in order to make sure they make a profit. In the end, it comes down to a simple matter of return on investment (ROI) and most banks feel that there is simply not enough money to be made from small loans. Banks have a number of highly skilled, and highly paid, employees to pay for. If a single employee were to spend hours issuing a small loan and tracking down those who do not repay the loan, the bank would not be making enough money to justify paying for that employee.
Another reason why payday cash advance loan companies are growing in numbers is because many people with good credit have alternatives for small, short-term loans. Some of the alternatives include checking account overdraft loans from traditional banks and available balances on credit cards. However, if a customer has bad credit or is unable to utilize checking account overdraft loans or credit card balances then their options become extremely limited.
Checking account overdraft loans are fine financial tools for consumers that are eligible for that option from their traditional bank. The problem is that not all banks offer these checking account overdraft loans to their customers, and even if it is offered by the bank, not all consumers have sufficient bank overdraft protection to take care of their small loan needs. Consumers that were unable to utilize the above mentioned methods for getting smaller loans were left to fall through the cracks until payday cash loan companies came into popularity. Cash advance payday loan companies now exist to help people who are in difficult financial situations similar to those described above get access to a quick payday loan.
A small, short-term loan is exactly what some people need to bail them out of a financial emergency. Cash advance payday loan companies are able to offer such small short-term loans because they rely on post-dated checks from the borrower. These post-dated checks work as a way to secure the loan for the lender and the check in hand guarantees that the lender has a solid chance of collecting their money. Another system used to secure quick payday loans by loan companies is called the faxless, no fax, or no faxing payday cash loan system. Online payday cash advance loan companies use electronic cash transfers to put the payday cash loan into the borrower's checking account and uses electronic checks to collect the payday cash advance payoff.
Payday cash loan lenders do charge a fee, but many people agree that these fees are fairly reasonable considering that these companies can quickly rescue individuals experiencing financial emergencies. For example, a customer may be asked to pay a fee of $45-$50 on a $300 loan. When you compare this fee to fees associated with bounced checks, credit card interest rates and late fees, payday cash advance fees seem quite reasonable.
Generally, if a person tends to repay loans on time and in full, then a quick payday loan is a reasonable option to use. People can start to get in difficult situations with these loans if they do not repay them on time. If a customer defaults on a cash advance payday loan or opts for an extension, they will owe additional service fees. All lenders, payday cash advance companies, credit card companies, and traditional banks charge extra fees to borrowers who fail to pay their loan payment on time.
If you find yourself in an emergency situation where you need fast and immediate cash, you can turn to a payday cash advance lender to get a quick payday loan. If you are eligible to use credit cards or checking account overdraft loans for help, you should opt to take advantage of one of these alternatives. In the absence of both alternatives, a payday cash loan will be your next best bet to help you get fast cash to address your financial emergency.
Advances on Payday Loans Info
Payday advances are Short-term Unsecured Loans that tie you over to the next paycheck arrival. This comes very helpful when one is short of money with a pile of accrued bills waiting to be cleared. At the time when patrons are sandwiched between paychecks, the advances are there to lend a helping hand.
Advances on payday loans stretch to the next payday. Though a hefty amount of fees is attached with the payday loans, but when compare to nonpayment fines or fees, it seems to be cheaper mode.
Generally, the payday cash advance loans are extended to a period of two weeks but some extend the loans up to 18 days. If the fixed time of repayment comes around and the seeker does not have the necessary funds to repay the respective credit, he can roll over the advance to the next paycheck by just disbursing the loan fee. Thus, this way it can go into never-ending cycle.
Today the World Wide Web has a great variety of payday loans. So, you have many options if you are interested to have one. But, it is advised to find a loan on Land base in your area as many payday lenders are confined to loaning cash only in their area.
Advances on Payday Loans are a procedural work. Once the loan is approved, lenders will deposit the notes into your checking account, if you have direct deposit capabilities and as soon as the advance is official, one can take delivery of overnight deposits, but this is provided by some of payday lenders only though most lenders provide the cash in your account in 2 working days. One can get cash transferred more early if he has applied for a loan from the land base lenders.
With many players in the field there also arises a question of authentic lenders with fair trade practices. Scores of payday sites allege that their sites are confidential and secure but even then you have to check their validity as otherwise you could be the next victim of identity theft. Some payday sites assert no faxing is necessary, nevertheless once the borrower is accepted; faxing may be necessary despite the lenders claims that faxing is not obligatory.
A Review Study shows that payday advances has both positive and negative aspects. As lenders assert these are quick with straightforward approval and business will not check your credit. These are elastic in nature so the borrower can relax since the transaction is discrete. The majority of advances are issued to borrowers to assist them in saving everyday expenditure on utilities, such as late bills or reconnection fees. Many borrowers employ the advances to cover recoiling checks and the bounce fees, which are often unreasonably higher than fees on a payday advances.
While on the lower side many officials and other people believe that payday lenders are gluttonous, greedy, inhumane people looking to take advantage of the poor and this also seems to be true when one goes for in depth details of loan. But also this is a fact that no financial institutions, IRS or other sources provide more than they take and payday loaners are just one among them.
Payday loans are cheaper and easy then the other modes. As if due to nonpayment one faces disconnection charges then probably the charges will be low if compare to payday loans fees, still disconnections is a last thing, which anyone wants. So, payday saves you from that hush up as well as embarrassing situation.
In case of bank drafts, if they continue for a longer period they can cost you a fortune but if one take a payday loan to cover those checks then definitely he will be paying less as fees of loan then that of bank, which usually take hell out of you.
Car repairs is another area and these always comes as a major expense and if one needs to fix up the same, the same day then he can rest on payday loans even though if he don't have a penny with him.
So, above all is just an analysis of advances on payday loans and now its up to the seeker that whether these advances comes as a source of relief or disgust.
One thing to be caution is never takes the loans for granted, since it could lead to debt problems.
Advances on payday Loans
Payday cash advance loans are extended two weeks more often than not, but few extend the loans up to 18 days. At what time the fixed time of the term to repay comes around, if you do not have the funds to repay the credit you will disburse the loan fee and roll the advance over to the next paycheck. The cycle can become damning.
Once the loan is approved, lenders will deposit the notes into your checking account if you have direct deposit capabilities. At what time the advance is official you will take delivery of overnight deposits according to few payday lenders, though, most lenders deliver the cash into your checking account in two working days, except, if you apply for a loan from the land base lenders. The lenders assert the payday advances are quick and straightforward approval and the business will not check your credit. Scores of payday sites online allege the sites are confidential and secure. This is important, since if the site is not secure and confident you could be the next victim of identity theft.
Payday advances are short-term unsecured loans that tie you over to the next paycheck arrival. At what time patrons are careworn sandwiched between paychecks, the advances are on hand to lend a hand. The cash loans are one of the undemanding advances to apply. Many payday lenders nowadays are making it easier to get a payday loan. Lenders assert no faxing is necessary at few payday sites, nevertheless once the borrower is accepted, faxing may be necessary despite the lenders claims that faxing is not obligatory.
The positive aspect of payday advances is the loans are elastic and the borrower can relax since the transaction is discrete. The majority of advances are issued to borrowers to assist them in saving everyday expenditure on utilities, such as late bills or reconnection fees. Many borrowers employ the advances to cover recoiling checks and the bounce fees, which are often unreasonably higher than fees on a payday advances.
The World Wide Web has a variety of payday loans. If you can find a loan on land base in your area it might be a better choice, since many payday lenders are confined to loaning cash, only in their area. Right now, there is controversy over payday loans and few State Reps are working to shutdown the sources.
Officials and a number of other people believe that payday lenders are gluttonous, greedy, inhumane people looking to take advantage of the poor. While this appears true if you consider the details of the loans, but payday loaners are no different from financial institutions, governments, IRS, and other sources that take and rarely give.
The fact is payday loans are cheaper than bank overdrafts. Bank overdrafts can cost a fortune, and if you take out a payday loan to cover checks you might pay a fee, but not as high as the fees, you will pay if the overdrafts continue.
If you have disconnection charges you likely will pay less than the amount of a payday loan, still, disconnections is not a good thing, so payday loans may be to your advantage.
Car repairs can cost a fortune. If you need your car to drive to work, thus payday loans may be of use. You might pay a fee for the loan, however if you lose your job it will cost you more. Payday loans is a source of relief, never take the loans for granted, since it could lead to debt problems.
For more information, visit the internet to view the different types of loans available to you.