What Is The Purpose Of A Payday Loan?

Payday Loan

payday loans have been helping people pay their pending bills for a long, long time. As per www.americanbanker.com/ banks came up with direct deposit advance to offer a similar service. So, what is the rationale behind a cash advance as payday loans are also called? These are an unconventional method of borrowing money when a person needs a quick influx of money. This can happen when you are waiting for your next paycheck and have fallen short of balance. It can also occur due to an emergency which resulted in an unexpected expense.

In short, the purpose of a payday loan is to give you access to hard cash quickly and easily. In technical terms, it is a high-interest loan with a short term which is mostly two weeks, i.e., 14 days. The amount one can borrow under a payday loan can go as low as $50 to as high as $1000. Different states have different rules when it comes to a minimum and maximum amount. When applying for a payday loan, the lender will inform you of these numbers beforehand. Like a traditional loan is obtained from a bank, a payday loan is obtained from a payday lender. These are companies that offer a number of financial services that can range from the exchange of foreign currency, payment of utility bills along with cash advances.

There are a number of reasons one can need a payday loan from paying a due home mortgage or give down payment on a car or pay for a car repair. The cash advance is free to be used in any form the borrower deems correct. There are no restrictions on the funds that are transferred to your checking account. From college tuition to buying a much-needed mattress for your home, the money can be funneled to any item, good, product or service. It is this freedom to use the money as necessary that makes payday loan so convenient. A traditional loan, which not only takes a long time to be approved, has an inherent string attached to it. One can use it for one specific reason like to pay the mortgage or to pay for student loans or car loan.

Applying for a payday loan is simple. It can be done in three ways:
Via phone
Visiting the lender
Most payday lenders tend to be completely online because it makes the process faster and more streamlined. You have to fill a simple application to apply for the loan. The form requires three basic data from the applicant:
Employment details
Banking details
Contact details
Some applications may ask for contact information of family and friends. These are the people they will contact in case you are unable to pay the loan on time. Each loan has a small fee attached to it. Generally, it is about $ 15 for every $100 borrowed. If approved you have to pledge to return the money owed, and the lender will either give you a check for the loan amount or transfer it to your checking account.