An explanation of how a payday loan or cash advance typically works
Let's say you want to borrow $300 until your next paycheck. You write a personal check to the payday lender for $345 (the $300 you want to borrow, plus a $45 fee). The lender gives you $300 and agrees to hold your check until your next payday or another agreed-upon date in the very near future.
When that date arrives, either you redeem the check by paying the lender his or her $345 in cash, or the lender deposits your original check into his or her bank to collect payment. You may also roll over the check by paying a fee to extend the loan for another two weeks. If you don't have the money in your account to cover the check you wrote, you could incur bank fees for bounced checks.
Process for an Online Payday Loan and Cash Advance
The lending process for an online payday loan or a cash advance is very simple. Generally all online payday loan companies follow very similar procedures. The steps to obtaining your payday loan or cash advance are the following:
1. You must first read and complete the payday loan company's online application form. By answering all the questions as completely and accurately as possible, you can make the application process go quickly and smoothly.
2. Normally a representative from the payday loan or cash advance company will contact you over the phone after they receive your application. This representative will ask questions to make sure that you have completed the application form correctly, and will finish processing your application. Sometimes the representative may ask you to provide additional documents by fax to support and verify the information you submitted on the application.
3. After you payday loan or cash advance is approved, the money you have borrowed will be deposited electronically directly into your back account. This process is very fast; the money will be available for your use within 24 hours.
4. The payday loan company will inform you when your payday loan will be due. When the due date for your payday loan arrives, the payday loan company will automatically withdraw the original loan amount plus the loan fee they have charged you from your bank account. At that point, your payday loan or cash advance will be repaid in full.
Requirements for a Payday Loan or Cash Advance
The requirements to qualify for a payday loan
or cash advance are much less than for qualifying for a standard bank loan. Payday loan companies try to make it as easy as possible for you to qualify for a payday loan or a cash advance, while still doing what is minimally necessary to protect their own interests. They make it very easy for almost anyone to qualify for a payday loan. Generally, the minimum requirements are the following:A full credit check is not needed.
You must be a U.S. citizen or a permanent resident.
Some payday loan companies may have additional requirements, but these are generally the minimum requirements that you must meet to qualify for a payday loan or cash advance.
Payment Options for a Payday Loan or Cash Advance
Whether you have obtained your payday loan in person at a store or over the internet, payday loan companies normally offer their clients different options on how they can pay off their payday loan or cash advance when it becomes due. There are three payment options that are usually offered by payday loan companies:
You can pay the entire amount of the payday loan on the due date. The entire amount consists of the amount you borrowed and the loan fee that the payday loan company has charged you.
You can pay the loan fee and only a portion of the amount you borrowed on the due date. This will extend the length of your loan. The payday loan company will give you a new due date and require an additional loan fee from you on your next due date.
You can pay only the loan fee on the due date. Again, this will extend the length of your loan. The payday loan company will give you a new due date and require an additional loan fee from you on your next due date.
The best of these three options is to pay the entire amount of the loan on the due date, if you are able. Extending the length of your payday loan means paying more loan fees, making the loan more expensive to you.
Category: Payday loans