If you are exhausted by running around to accumulate funds for taking an emergency stock for your business, which is still short of the requisite amount by a margin. Think about your bank again. It can help you by providing a payday loan which is a type of short-term borrowing with a small repayment period. A payday loan is an effective option to round off the cash amounts for contingencies.
When can a payday loan help you?
In emergency requirements like medical expense, penalty payments, vehicle repair, unexpected bills, business advances etc, a payday loan is indeed a happy option. Payday loans are very similar to cash advance in the repayment method. The due amount is cut directly from your cash flow or account on the next pay date unless you personally pay off them.
They are very quick to get approved taking a maximum of 48 hours and ask for only a few general documents. The repayment periods can be as long as 90 days. The banks do not generally conduct a credit check for approval and even allow applying online. Thus, you can avoid wasting your precious last minute running time by standing in long queues and meeting several officials. You don’t need to provide any kind of security or mortgage.
How do you apply?
Online application is conveniently offered by many lenders like get a cash advance as an example. Once you submit your application and necessary documents through fax or mail, the lender checks your income and banking history. You may need to submit your bank statement for the same. The criteria differ from lender to lender. You will get a quick response and once you avail the loan which gets credited to your account by direct transfer, the full payment will be cut from your account in the next payday. If you are personally approaching a payday lender outlet, you are supposed to repay the full principal amount with the interest in person at the outlet on the maturity date of the loan. On your failure to do so, the total due amount in your postdated check will be redeemed from your cash inflow.
Be wise with the repayment
Although they are last-minute saviors, payday loans charge very high rates of interest compared to regular loans. Since the amounts received are small, try for an advance prepayment for early closure. Many banks do not charge any prepayment penalty. When you borrow an amount, the lender or the bank takes post-dated signed checks from you which are used by the bank to levy payments from the next due date. The amount of the check will be the sum which is borrowed plus the interest or fee on it. If you are paying very small amounts, soon you will be in debt for the principal and compound interest on the already charged heavy interest. Also, if your account has insufficient balance to pass the check Private Alternative Loans | Student Financial Services , it gets bounced and you will be charged heavily in addition to the compounding interest.
Carry out a background research on the payday lenders instead of abruptly approaching one. If you know anyone who had availed similar options, ask for their authentic review. Select a lender with an approachable lending history.
All not so good about payday loans
Yes, they can help you in the time of need when you don’t have other better options. Due to the same reason that payday lenders help customers in distress, they have a bad reputation for the high charges and penalty. Most of their customers are already in debt, having a bad credit score and struggling. The high repayment and annualized interests (percentage as high as several hundred times the principle) may result in debts surmounting by taking away their major profits. On the reverse, as this is an unsecured loan offered to customers, a majority being in the bad credit score section, the lenders are also at high long-term risk if the business fails to turn profitable.
As a means to exert some control on the exceptionally high interests (unreasonable and excessive rates of interest or usury), several jurisdictions have put curbs on payday loan itself or on the annual percentage rate (APR) that a payday lender can charge.
So the baseline is that short-term financing like payday loans is quick lifelines only to save you from emergency money shortages, never as an alternative to other funding options. Choose wisely.