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By: Nasrullah Mardani

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Payday Loans - Fast Access to Quick Money

Payday loans are that the borrower be at least eighteen years of age, have a job (or other regular source of income) and have an active open bank account. The lender evaluates the application and determines the eligibility of the borrower based on its own set of approval criteria. Things like income, direct deposit of benefits, and payday loans history, may determine whether or not the loan is approved. At this point the borrower authorizes the lender to withdraw the advanced loan amount, plus a fee from his bank account on his next payday. Essentially, the borrower is making out a check for the lender to hold. With this guarantee of repayment in hand, the lender electronically deposits the money into the borrower’s bank account. The loan is normally due on the borrower's next payday. Payments are processed by the lender by electronic transfer from the borrower's bank account. Most lenders will allow the borrower to extend his loan by paying a fee. Since the loan is secured by the borrower's paycheck, the lender issues the payday loan with no credit check.

Payday loans are not covered by any funds in his bank accounts. This means that these checks bounce when the customer does not pay, resulting in fees from the borrower's bank and the lender. Moreover, returned checks have a negative impact on the consumer's credit card history. If there are too many bounced checks recorded on the account (especially if they were used to get payday loans), borrower scan even lose their personal bank accounts. As lenders have consumers' personal checks to secure loans, some of them may use coercive collection tactics. Sometimes criminal penalties are threatened for those who cannot make good on checks. Military personnel may be threatened with a court martial in case they do not pay their payday loan checks. In some states lenders are allowed to sue for multiple damages for bad checks.

Payday loans are primarily convenience and access to emergency funds. Direct deposit does not require ongoing visits to a check-cashing store or office, and the entire transaction can be handled online or via fax. This represents considerable time savings and the ability of the borrower to get the funds he needs without interruptions at work. As direct deposit payday loan companies do not check an applicant's. , in cases where a borrower truly needs cash, this form of lending can help people prevent the shut-off of utilities, eviction, or having to go without food because of lack of funds. There are also significant disadvantages to taking out a direct deposit payday loan. The fees and interest rates associated with these loans can be ridiculously high and can get people into a debt cycle from which they find hard to break. The interests payments can cost so much that people need to take out additional loans just to maintain a positive. If a person defaults on a loan, the payday loan company has her bank account information and can repeatedly draft the account to get its money back. Each draft may cause the borrower to incur additional fees from both the payday loan company and his bank, further damaging his financial health and depleting his financial resources.


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