Payday Loans

You’ve heard that people use payday cash loans, but don’t know what they are. They are not pawnshops where you receive a pittance for something of value with no hope of retrieval. They are not the old fashioned loan sharks waiting to break your legs if you don’t cough up the dough. So just what is a payday loan?

Going under the names “cash advance loan,” “deferred deposit loan,” and “personal unsecured loan,” a payday loan is a very short-term loan of three to fourteen days usually just of a few hundred to maybe a thousand dollars.

Ostensibly, their purpose is to provide emergency cash funds quickly (for a fee) for immediate needs expected to be covered by an upcoming paycheck. They are not for long running needs or an addition to current income. Payday cash loans are intended to be the commercial version of an advance on your paycheck, something many employers will no longer do.

Your job and a current checking or savings account provide the primary proofs needed for a payday loan. The way they work is this:

* You fill out an application either online, at a store location (though these are becoming less popular now), or by fax.

* When approved, you either provide a check covering the loan and fee dated for your payday when the funds will be in the bank, or authorize an ACH transaction. The ACH transaction allows a company to deposit and withdraw funds from your bank account.

* The payday loan company then deposits the agreed upon loan in your checking or savings account. You, in turn, take care of the emergency situation requiring the cash.

* On the date the fast cash loan comes due (your very next payday), the company either presents the check for payment or does an ACH withdrawal of the payday loan amount plus the fee from your account.

If completed online, no one else knows about your difficulty except you and the company. Even bad credit payday loan companies go out of their way to be circumspect and reserved.

There are two serious considerations about a fast cash payday loan. The first is the fee. This may range from ten to thirty-five dollars per hundred loaned. That means that you’ll be writing a post-dated check from a low $550 to a high of $675 to get to the $500 you would receive in a few days from your job.

The second has to do with your finances after you repay the fast cash loan. If you hand most of your coming paycheck over to the payday loan company, will you be able to handle your regular living expenses until the next payday? Borrowing the least amount to cover what is absolutely necessary helps.

In the final analysis, payday cash loans have become a relatively easy, if expensive, way to meet the needs of an emergency your own resources cannot immediately cover. You can expect the company to be tactful, courteous and flexible in helping you out. Used carefully, with planning, this last resort may be what you need.