| |
Is Payday loan inexpensive? Issues and Concerns
By Mandeep Raj Mishra
Payday loan comes at a very high price. Payday loan is a short-term loan in the form of paycheck advance or cash advance that is intended to bridge the borrower's cash flow between the paydays. Finance companies, check cashers and others are making these short term, high interest loans that come in a variety of names- payday loans, check advance loans, cash advance loans and so on.
A borrower writes a personal check payable to the lender for the amount that he or she would like to borrow plus the fee for payday loan. The company gives the borrower the amount minus the check. Fees charged for the payday loans are either a percentage of the face value or a fee charged per amount borrowed. In legal terminology, under the Truth in Lending Act, the cost of payday loan must be disclosed. All information regarding the payday loan must be received in writing.
Payday Loan: How does it work?
The borrower who is seeking a payday loan usually writes a post-dated check for a stipulated period the payday lender agrees to hold the check until the borrower's next payday. During this time, the borrower of payday loan can either redeem the check by paying it in cash, or can refinance it by paying a fee to extend the loan date further. If the borrower does not refinance it, the lender deposits the check. Usually when a borrower chooses to refinance his or her loan amount, the finance charges increase.
The payday loan amount is given in cash, which is secured later by the borrower's post-dated check including the rate of interest involved. Since many small franchisees and financial institutions are involved in making payday loan, there is variation on the payday advance. Mainstream banks usually offers "direct deposit advance" for customers whose paychecks are deposited electronically. Moreover, payday loan providers who are into partnerships with income tax preparation firms offer "refund anticipation loans" to filers.
Most states in the Unites States have usury laws, which forbid interest rates in excess of a certain APR regarding payday loan. Payday loan lenders usually operate in those states by funding loans through a loan chartered in a different state.
Payday Loan: Things to Consider
Payday loan usually appeals to young consumers, who have practically limited understanding of the finances and also those who are in high debts. Payday loan lenders usually go for consumers who are in high debt and have along history of using high-risk lenders. As a result, payday loans have become a subject of controversy even though they are perfectly legal. Supporters of payday loan argue that the payday loan processing do not differ much from the high principal, long term counterparts such as mortgage loans. They also argue that the interest in a payday loan is less than the cost involved with bounced checks and late credit card payments.
Becoming aware of your options before you need a short-term loan is important. Remember that spending more than you make is ALWAYS a trap, and payday loans are an expensive solution to a money management problem. For further information, you can visit http://www.cash-advance-nofax-credit.org/ or http://www.payday-loans-cheap-fast.org .
About the Author
Mandeep Raj Mishra is the director and Search Engine Consultant of Outsourcing Haven, Inc. He has been in the line of SEO for a couple of years and has successfully completed a number of projects and in various industries. He has also written and published a number of articles related to Internet Marketing and Search Engine Optimization.
Article Source: http://www.simplysearch4it.com/article/32045.html
| If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/32045.html" as shown above and make it hyperlinked. |
| Some other articles by Mandeep Raj Mishra | Payday Quick Loan – Instant Hassle Free Loan
Are you stuck with an emergency, you need money urgently and you are waiting for your next paycheck? Have you tried hard ...
Cash Advance - Boon or a Bane
Nowadays a lot of people are inclined towards borrowing cash in advance to make their ends meet. There are finance companies, which are offering ...
Get Bad Credit Cash Advance Services
Bad credit cash advance services comes to your rescue when you have a bad credit history and most financial institutions do not agree to give you a loan. Bad credit ...
Payday Quick Loan
Payday quick loan is a cash advance between paychecks. This cash advance loan – the payday quick loan is a way to get through difficult financial times.
The payday quick loan is enticing for many ...
Payday loans
Payday loans are used by many men and women to get them from one pay period to the next pay period at ...
|
|
| |
|
|
|
