Who takes payday loans?
For millions of Americans – particularly those who live paycheck to paycheck – these tiny, short-term loans are a way of life. Just before Christmas last year, more than 10 million people took out a payday loan, according to industry statistics.
What is a payday loan?
A payday loan is a short-term loan for a small amount of money (usually up to $500) often perceived as a new method of acquiring consumer debt. Payday loans go by a variety of other names, including cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans. Usually, a borrower writes a personal check payable to the lender for the amount he or she wishes to borrow plus a fee. The company gives the borrower the amount of the check minus the fee. Fees charged for payday loans are usually a percentage of the face value of the check or a fee charged per amount borrowed.
Where can I find a quote for payday loans?
Lowestloanrates.com is the leading online marketplace for payday loans. With more than 1000 participating lenders in our network, we can help you locate one who can help meet your needs. Click here to get your Quote for Payday Loans. This is a free service.
When should I consider a payday loan?
People who take payday loans often say, “I just need enough cash to tide me over until payday.” They are often lower-middle-class “working poor” who see few options other than such loans. It's not illogical. The payday loans are safer than dealing with loan sharks and payday loans may end up being cheaper than actual banks.
Why are the interest rates so high?
Due to processing costs on such small loan amounts, conventional interest rates would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would only generate 38 cents of interest, which would fail to match loan processing fees. Also, the interest on payday loans is less than the $60 to $70 penalty for bouncing a check or the $30 in late fees – not including interest – that credit card companies extract for missing a payment.
How do I repay a payday loan?
The loan is given in cash and paid back via electronic withdrawal from the debtor's checking account. If you extend or “roll-over” the loan – say for another two weeks – you will pay fees for each extension. If you don't pay, only thing that gets broken is your credit rating.
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