Payday loans are unsecured loans usually with very high-interest rates. These loans are taken on the agreement that the lender will receive his /her money when the borrower received his wage or salary. Most times, payday loans are advertised as emergency loans for short-term relief but most people take payday loans for routine living expenses like car payments, mortgage payments, credit card payments, utilities, rent, etc.
Most times, payday loans do not require any collateral, but they charge the consumer or borrower with very large interest. Most times these loans do not even consider the borrower’s ability to repay the loan. This means they could be death traps for consumers. Therefore, before taking payday loans, study other better alternatives.
Are payday Loans Fixed or Variable?
Most times, payday loans are fixed. This means that you are required to pay back the loan in one lump rather than pay it off in small amounts. For this reason, the interests on these loans are fixed. These rates range between $10 to $30 for every $100 borrowed.
Can Payday Debt be Forgiven
It is very rare for payday loans to be written off or forgiven. This is because of the. Significant interest is placed on these loans by the lenders. If you have a pending payday loan, try and pay off this loan as soon as possible.
If you do not pay back the loan, the account will be sent to a collection agency that will pursue you for the money and the interest that you owe. This is very unpleasant, it will add money to your overall debt and damage your credit.
Getting a Payday Loan
Payday lenders are mostly small credit merchants with on site outlets that allow application and disbursement of loans online. Some other payday lenders accept strictly online applications. To get a payday loan from any of these lenders, you must obtain a paystub from your employer that shows your current level of income. The principal of the loans are usually based on the borrower’s short-term income. So many lenders also use the borrower’s wages as collateral for loans. Lenders of payday loans do not usually perform a credit check or the borrower’s ability to lay back the loan.
Can you Get a Payday Loan Without a Bank Account
Of course, having a bank account is not usually a compulsory requirement to get a payday loan. However,lenders that do not require bank accounts charge very high rates . A prepaid card account may be enough to get a pay day loan even if most lenders will definitely ask for a bank account.
These loans cost so much and may be difficult to pay back, so it is best to avoid them. If you cannot pay back the debt, then more fees will add up to it, leading to a trap that is very hard to get out of. If you should take payday loans, take the one that you can pay off easily.
Interest Rates on Payday Loans
The lenders of Payday loans charge very high rates of interest as much as 780% in annual percentage rate (APR), having an average loan running at nearly 400%. Some states have usury laws that limit interest charges to anywhere from 5% to 30%. Even still, payday lenders fall under exemptions which makes them give high-interest rates.
These loans qualify for many state lending loopholes, therefore, borrowers should beware. The regulations on these loans are mostly governed by the individual states, with 16 states—Arizona, Arkansas, Colorado, Connecticut, Georgia, Maryland, Massachusetts, Montana, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Dakota, Vermont, and West Virginia—plus the District of Columbia outlawing any kind of payday loans
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