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Payday Loans – The Answer To Fast Cash?

2011 January 10

Payday loans also referred to as cash advance loans, are small, short term loans that usually require one-hundred percent repayment within the first 2 weeks after cash is borrowed. They provide borrowers with fast cash to help meet unexpected financial requirements, and are great resources for responsible individuals.

Over the years payday loan companies have been given a bad reputation, this is mainly due to the large APR that these types of loans carry. Most of these companies never intended for their loans to be used for long term solutions, but that’s exactly what many irresponsible borrowers turn them into.

Most of these lenders require borrowers to supply proof of employment, an active checking account, and a post dated check before their loan can be funded. Once the loan is funded, the borrower agree on terms that include very high interest rates. The payday loan nightmares are usually triggered when a borrower isn’t able to pay according to the agreed upon terms.

If the loan can’t be paid in a timely fashion, it can be rolled over depending on state laws. Rolling the principal over will usually double the fee’s owed, and that’s where these loans get out of control. Many state laws no longer allow the rolling over of payday loans, and the one’s that do usually have caps set to help protect consumers.

The interest rates on these loans can add up to several hundred percent when rolled over too may times. Another reason that critics usually down payday lenders is the fact that their off line stores are usually only found in poor communities, but how many rich guys do you know that need a payday loan? These critics claim that debtors are usually caught in a tornado of debt, forced to open new loans in order to payoff old ones.

Many states have laws prohibiting the service of payday loans at all, but this loan industry has primarily moved it’s businesses from offline to online, making it easier for unlawful companies to provide prohibited state residents with these cash advances while staying under the radar. This can sometimes back fire on the lenders when their dealing with educated consumers but some of these guys are willing to take their chances.

Payday loans are great because they fill the consumer need of fast cash loans that traditional banks don’t, but it is very important that consumers remember that these loans are intended to be short term. If your not 100% able to pay your loan within the terms, it may be in your best interest to find another means of funding.

Maintaining a payday loan requires a smart and responsible individual, live smart – borrow responsibly.

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