Online Payday Loans Explained

Payday loans refer to small, easy and short-term loans that can meet the expenses of a borrower till his next payday. The defining characteristics of payday loans include simple processing systems, instant approval and zero credit checking. Gone are the days when borrowers had to suffer a lot of troubles in the form of high eligibilities, heavy interest rates, tough credit checking and much more. Payday loans are effective services for those who are worried about unexpected expenses while being short on funds.

The process of obtaining credit from payday lenders is very simple. What borrowers have to do for the acquisition of a payday loan is to visit payday a lending store and secure a small cash loan by filling in a form inquiring about name, contact information, age, bank account details and job information. All this information is required just for the sake of knowing whether the borrower has consistent source of income so that he can repay the credit easily.  After the submission of the loan form, the borrower has to wait for approval. Generally the process takes no more than 24 hours and the money demanded is transferred to the borrowers' accounts.

Though the process of acquiring payday loans online does not involve any valuable asset as a security for loans, the borrowers are required to write a postdated cheque to the lender with the full amount of the loan plus service charges that are usually 25% on every $100. The borrower is anticipated to repay the loan to the store on the given day; however, failing to do this may cause annoyance to both the lender as well as borrower. The borrower is now subject to face bounced cheque fee from his bank in addition to the actual loan. As a result of failure, the borrower may also face additional interest rates thus mounting his payable loans.

The foremost advantage of a 1 hour payday loan is that you can acquire credit instantly provided you can pay it back on time. This loan service appears to be unique in that it helps you meet your expenses that come up unexpectedly. Whether you have to go on a short vacation, have an unexpected medical or utility bill, payday loans will cater to your needs with convenience.

The eligibility criteria are not very tough to chase. One should not worry about his bad credit history or inability to submit high security. If you are 18 years old with US citizenship, and have an active income, you are eligible to get the benefit from a payday loan. Since the competition is increasing on daily basis among lenders, you can now find lenders offering you a good package with faster approval.

The biggest drawback of a payday loans is that it entraps low income community in a devil snare of loan. The interest rates range between 15- 25% on every hundred dollar loan, when obtained for a period of 14 days. If you are unable to repay the loan and ask for extension, it is more likely to cost you at least half of the actual loan as interest in addition to service charges and original amount. So it is better to seek payday loans only when you are sure that you can repay it on time. Otherwise, the chances for entrapping you in an indissoluble loan trap are very high.