When you need a small but significant amount of cash fast, a payday loan may be just what you need. Designed to help people who need only a few hundred dollars for emergency expenses that must be covered before their next payday, pay day loans are a convenient way to obtain the necessary funding. It is important, however, to use payday loans responsibly, just as you must use other forms of financing responsibly. If you live on a budget and borrow only what you can afford to repay and still have money left over for other expenses, the payday loan can be a good way to meet unexpected needs.
The Basics of the Payday Loan
Applying for payday loans is easy. You will typically need to provide personal identification, a couple of pay stubs and your bank account information to a payday lender. Based on your income, the lender will qualify you for a certain amount of money, which will be granted to you immediately. On the day that the loan is due, all of the principal, fees and interest associated with the loan will be deducted from your checking or savings account, or you can repay the loan in person. These loans are called payday loans because the repayment date is usually the date of your next payday.
Types of Payday Loans
Because different people have different needs, there is no one-size-fits all payday loan. Here are some of the most common payday loan options:
- Traditional Payday Loan — With this kind of payday loan, you apply for financing in person at the office of a payday lender. This is perhaps the most common form of payday lending today.
- Online Payday Loan — Payday loans online allows you to apply for financing from the comfort of your home, office or wherever else you can get an Internet connection. This loan requires direct deposit and withdrawal because you do not apply for the loan in person and cannot personally receive cash from the lender or pay back the loan. An online payday loan is the most convenient form of payday financing for most people.
- Bad Credit Payday Loan — A bad credit payday loan can be obtained even if you have poor credit. No credit check is performed with this type of payday loan, though it may be performed with other payday loans. You should be aware that a bad credit payday loan often has higher fees and a higher interest rate than other payday loan types.
- Reduced Fee Payday Loan — With a reduced fee payday loan, you pay less in interest and other charges than you pay for other payday loans. This type of loan is typically available only to those with excellent credit.
- 30-Day Payday Loan — Because most people are paid every two weeks, most payday loans have a loan term of fourteen days. The 30-day payday loan is for those who are paid once a month because it gives you a thirty-day window for loan repayment.
There are several other payday loan types, including payday loans for military service members and other special categories of people. In any case, make sure to borrow responsibly and pay back your loan on time no matter the type of payday loan you obtain.