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What You Should Know About Payday Loans [Payday Loans]

Payday loans, or simply posted-dated check loans, are short term loans that usually come in handy when you are in need of finances in between paydays. These short term loans require very few documents to be verified and usually come at very high interest rates. So, what are some of the facts that you need to know about this type of loans?

Temporary Help
Payday loans are usually designed to help individuals who have temporary financial emergencies, individuals who have a bad credit rating and cannot secure a normal loan and also individuals who do not necessarily need a large amount of money that will require them to pay for a long period of time. Applying for a payday loan is usually easy and fast, especially when using the Internet. Since the loans usually last for only few weeks, many lenders usually ask for only a few documents. These documents include your identification card, your bank account details and proof of employment, which is usually a pay slip or an official letter from the company that you work for. Most lending firms will rarely ask you for more documents apart from these three.

Interest Rates
Payday loans usually have very high interest rates because they have higher risks associated with them. Thus, to be on the safe side, many lenders charge high interest rates to cover the risks involved with lending out payday loans. A normal payday loan for example can have 40 to 45percent interest rate based on the amount being asked for. Even though payday loans usually attract very high interest rates, it is easy to get approved for them. You can get approved for the loans even if you have a bad credit score. Lenders will never ask for your credit score card to approve you for a payday loan. This type of loan can be treated just the same way as the normal bad credit loans but only to a given extent. You only have to be a US citizen, have an active checking account and be employed to get approved for the loan.
Payday loans can come handy when you have a bad credit score and want to improve your rating. Since your rating depends majorly on how well you service your loans, by paying a payday loan on time, your scores will improve with time. However, in order for you to do this, apply for an amount that has an interest rate that you can afford.

Choosing a Payday Loan
Payday loans are usually expensive and require timely payments. Therefore, it is important to always consider all the financing options you have first before settling for this type of loan. When your application is accepted, tale note that you may have to make a payment that might cost more than half of your salary. This payment is usually made in full, meaning you will automatically have the payment deducted from your account once your salary is paid. It is thus advisable to always weigh your options before you settle for a payday loan.

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