Payday Loans

A question that many people ask is what are payday loans or credit line? They wonder if there is some type of scam behind it. The answer is no. There are no gimmicks and no scams. A payday loan is a legitimate loan for a person to get a little bit of extra money in order to pay bills that can’t wait until their next payday.

Kayla wanted to get a payday loan.  She was a bridesmaid in her sister’s wedding and the money for her dress had to be paid.  Kayla did not have the money for the dress and wasn’t expecting her paycheck for another ten days, as she was paid biweekly.  The wedding was only a week away and it had to be fitted.  She had to find the money to pay for her dress.  She could not ask her mother because she already owed her mother money and it was her sister’s wedding so she could not ask her.  Kayla had heard from a few friends at work about payday loans.  She did some research and decided to do it.  When she was applying for the loan her very skeptical roommate Kyle came in and told her that it was a scam.  Kayla told Kyle that she did the research on it but he questioned her anyway.

Question – What is a payday loan

Answer – Kayla explained to Kyle that a payday loan was a short term loan.  It was a loan basically designed to hold the borrower over until their next payday.  The usual lengths of the loans were either 7 to 14 days or 14 to 21 days.  It was up to the borrower.

Quesiton – Is there a credit check and do you need to make a certain amount of money?

Answer – Because this is a low amount , short term loan, a borrower’s credit is not really an issue.  People with bad credit are able to get a payday loan.  Some companies require that you make at least $800 per month for the loan, and some require $1000 per month to qualify.  The loans offered are from $100 to $1000.  If you are looking for a larger loan, closer to $1000, you will be required to make more than the minimum amount to qualify.

Question – What are the requirements for the payday loan?

Answer – The requirements for the payday loan are rather simple.  The first thing that you need is a monthly income as stated above.  These incomes can come from a few different sources.  Wages from a job, Social Security, unemployment, and disability insurance checks.  There are also a few different income sources that are not accepted.

Social Security in your child’s or any other person’s name and state welfare checks.  Whatever source of income you have, must be direct deposited into your account.  You are required to have a bank account that had been opened for over sixty days.  You will also be required to fax a copy of your most recent bank statement and a copy of a voided check.

Question – How do you get the money?

Answer – The money is electronically deposited into your bank account usually the next day.  If you submit your application and fax over your bank information by 7:00pm EST or 4:00pm PST, the money will be available the next day. If it is sent later than that it can take two days.

Question – What happens if you don’t repay the money right away?

On the due date of the loan, the lender will electronically withdraw the full amount of the loan as well as the loan fee.  If the money is not in the account in the full amount, you will be required to take out an extension.  The lender will not accept partial payments.  The extension will cost you another bank fee.  This is allowed up to three times.

By the third time, you will owe the full amount plus four bank fees.  The original fee and then three more for the three weeks of nonpayment.  After three weeks, there will also be a penalty fee added as well as the bank fee.  For example, if after four weeks the money is still not there, you will owe four bank fees as well as the penalty.  The penalty is $50 if your loan was up to $599.  If your loan was $600 or higher, it will be $100.  If you do not pay this loan back, it could end up costing you thousands of dollars.

Question – Are there any hidden fees?

There are no hidden fees.  The only extra money that you will be responsible for are the penalty fees and the extra bank fees if you neglect to pay the loan on time.

Question – Can you have more than one loan out at a time?

Answer – The answer to that question was no.  It is possible to take out one loan and pay it back and then take another.  You cannot have two loans out at the same time.  If you are very late repaying your loan, you may not be approved for another loan for a while.  This type of loan could be a lifesaver in some situations. It is advised to pay the loan on time to avoid penalties and getting rejected the next time you need a payday loan.

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