A payday cash loan provides an option for a person who needs a short term loan and who cannot necessarily qualify for bank financing or a standard credit card. A payday cash loan thus serves as an alternative to getting a cash advance or other type of loan when immediate financing is needed. While a payday loan can serve an important purpose, there are some risks associated with a payday cash loan that borrowers should be aware of.
A payday cash loan is designed to be a short term loan with a repayment period of one to two weeks. In other words, it is supposed to give you cash to get you through until payday. You do not need to get credit approval to qualify for most payday loans; you just have to have a job and a bank account.
When you take a payday loan, you request a set amount of money -usually a few hundred dollars- and that money is given to you immediately. Upon requesting the money, you either provide your bank account information or you write a post-dated check for the day you are scheduled to receive your paycheck. This check is written for the amount borrowed, plus the fee. The fee can be a significant percentage of the loan; for example, if you take a $100 loan, you may have a $15 fee.
On the day your payment is due, the lender will either cash your check or debit your account, or you will be required to go to the lender and either pay him back via some other method or extend your payday loan for another pay period by taking a new loan.
While payday cash loan sometimes get a bad rap, they do serve an important purpose. If you need money to pay your rent, or deal with sudden medical expenses or car repair bills, a payday loan may be your only option if you don’t have or can’t qualify for a credit card. You should just be aware that you are being charged a high interest rate for the privilege and convenience of the instant and easy access to cash. You should also be aware that it is easy to become trapped in a cycle in which you need to take out one payday cash loan in order to pay the next payday cash loan, which means you will end up paying a fairly significant amount of money in interest until you are able to finally pay off all of the loans you took out.