What Are Payday Loans & Why Use Them?

What exactly are payday loans and why do we need them?

Payday loansĀ tend to follow these three guidelines:

  • The loans aren’t for large amounts, like a mortgage or student loans.
  • Due dates are usually built around your payday – They don’t take large amounts of time for repayment.
  • In advance, you give the lender permission to withdraw that amount of money from your account, come payday.

A payday loan is different from most other loans in it’s repayment schedule. This loan is typically paid off in one ‘lump sum’ payment that wipes out the entire balance. There are other variations available; However, this tends to be the most common format. These short-term loans can be a good option for people in a tough spot with an unexpected bill, medical expense or car repair. In fact, many people with a stable job will use payday loans to stay afloat during tough times where larger amounts of money are needed.

What are the typical qualifications for getting a payday loan? They’re actually quite a simple loan to get when compared to other, larger loans.

To qualify for a payday loan, the lender typically needs to have a checking account that is in good standing. The borrower also must have predictable income/job/payments coming in on a predictable basis. The ‘cash advance’ should be awarded to people who meet those simple requirements.

Once you have completed the payday loan/cash advance, now you’re back into a financially stable situation. This would be a great time to move towards building your credit with started credit cards or longer term loans. You may also want to seek out building up a savings account.

 

 

 

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