insuranceclub's Blog

Pay day loans are short-term loans. Needless to say, this type of financial solution takes effect in a matter of days, 31 days the maximum, depending on your lender.

In addition, pay day loans are for emergency purposes, for expenses that crop up before you receive your paycheck for the month. Because the amount that you can borrow is not that substantial, pay day loans should be used for expenditures that will need your financial attention for an extended period of time.

The rationale of pay day loans is simple: you need to pay back the amount you’ve borrowed on your next payday. It’s easy enough to understand and it does not need further explanation.

However, perhaps due to today’s trying times, some people use pay day loans far longer than it’s supposed to be. They keep in renewing their loans. When this is the case, they fail to realize that they will be incurring enormous finance charges and the interest rates could skyrocket to as high as 4 figures (e.g. 1000% in APR)!

Let the Statistics Speak

When this happens, you feel like there’s no way out. If you say that you’ll only avail of on payday loan and not come back to your lender after completely paying it off, then try to ponder on this. One of the payday loan lenders in Colorado, for instance, estimates that among their customers, only 2% of them take one loan.

Now this may come as shocking news because pay day loans are supposed to be availed of for expenses that do not meet your monthly budgetary requirements. If you have to be realistic about it, this means that if you are able to properly budget -- and of course, lived within your means -- then you should not have been confronted with a need to make a pay day loan often. But of course, emergencies crop up from time to time. However, if they sprout like mushrooms on a regular basis, then perhaps you should not label them as an emergency and you need to adjust your budget accordingly this time.

Further, a Wall Street analyst reveals that on the average, a pay day loan costumer makes 11 transactions annually. This is like making a pay day advance every month! Surely, there is something wrong with the way an average customer handles his or her money!

Getting into a Debt Cycle

This is a question more about habit and than about budgeting skills. If customers avails of pay day loans 11 times out of 12 payrolls in a year (supposing that paychecks are given only once a month), then individuals have grown dependent on this financial option. Perhaps, it started out as a sincere need of money, and then seeing that getting a pay day loan is fast, the person avails of another, then another, then another. In short, the customer has been living in debt.

When you are in this deep hole of financial dependency, then the nearest thing that you’d get to is a debt cycle. It will be hard to get out of it as your coming paychecks are already spent.

Pay day loans should be used for the mere purpose that they are made available to the public. They should not be used as a means of fuelling an impossible lifestyle. Otherwise, you are just getting yourself into more trouble, rather than financial independence.

A payday loan is a short-term loan. You can avail of it if you are in need of immediate cash and you promise to pay back the amount on your next payroll. A payday loan is becoming more and more popular because often, it is hassle-free and you can get the proceeds immediately. Loan processing varies but it is usually between hours and a couple of days. Moreover, when you avail of a payday loan, you are not required to submit countless requirements or fax supporting documents. In short, it is relatively fast, and easy!

However, critics contend that there’s more to the simplicity of this fast and easy access to money. On one hand, payday loans could charge high interest rates -- to as high as 1355% (APR), in the UK for example. On another note, as some payday loan lenders are paperless, and they do business online, borrowers need to transfer information (personal information and bank details) over the Internet. Of course, you know the level of security of the Worldwide Web when it comes to this type of information!

With all these, you ask yourself: where can I ever find money when I need it badly? But did you know that there are actually many alternatives for you? Yes, a payday loan is not the only answer to your need for money.

Here are some of these alternatives.

Pawnbrokers. Simply, this is where your gorgeous pieces of jewelry or expensive home appliances can be counted on. You can pawn them and get instant cash. Of course, you need to pay for a minimal interest rate but at least, this is not so burdensome as there are government policies governing this.

Credit Unions. Otherwise known as cooperatives or cooperative financial institutions, these organizations provide financial assistance and credit to its members. Thus, if you are a member of one, you could take advantage of the proceeds of your savings in your cooperative. Most probably, you personally know the administrators and you understand the policies of your credit union so you can trust that you will not be charged with unreasonable interest rates.

Paycheck Advances from Employers. When your budget is really hanging on a balance, then you can seek assistance from your present employer. A large percentage of multinational corporations offer a cash advance benefit to its employees. Take advantage of that. If you’re not sure if your company has this benefit, you can always ask your Human Resource Department.

Direct Loans from Family and Friends. Often, this option is not explored because of shame. You feel ashamed and uneasy approaching your family and friends and asking to borrow money from them. This act is tantamount to saying that you are broke and that you have not managed whatever little funds you have.

However, if you are really in dire need of money, then you need to swallow your pride and seek help from them. The best part about this alternative is that you get to save on the interest rates. Most probably, your friends will charge you with very minimal interest rates, or better yet, with no interest fee at all!

So you see, there are still many alternatives to gaining access to money besides applying for a payday loan. You can always choose the option that would not strike your ego and one that would not put so much stress on your pocket.

If you’re in need of some immediate cash, you are probably thinking of availing of a payday loan. This seems like a rational choice. The nature of payday loans, and other short-term loans in general, is that you’re compelled and obliged to pay back what you’ve borrowed in a matter of days. Also, this kind of loans is relatively fast – no need for lengthy processing and countless documentation. This is perhaps the biggest catch of pay day loans.

But did you know that there’s better news to all of these? Yes, there is still one thing more enticing and more appealing than payday loans, and that is availing of a payday loan online. As the name suggests, the appeal of this kind of loan is that it’s done without the need for physical presence.

All you need to have is an Internet connection, a desktop or a laptop, and your supporting documents, the basic ones. If you have all of these, then you’re surely on your way of getting that needed cash without necessarily leaving home!

Electronic Transfer

Basically, everything travels through the net. Submission of requirements is done online. You don’t have to fax your pay records or your check. You simply go to your lender’s website and fill out an application form and viola, you’ve accomplished the process in a payday loan online!

Because your lender will have access to your bank account, they can just wire your loaned amount there. And you know how e-commerce works. Basically, once you’re approved, you can obtain the proceeds of your loan in a matter of seconds. Isn’t that sweet?

Believe it or not, payment of your loan is also done through the web. Some providers of payday loan online automatically withdraw your due amount from your bank account. Basically you simply have to go to their website and file for a payment request and you’re good to go. No need for you to be in long queues and attend to unfriendly bank tellers just to fulfill your obligation to your payday loan online lender.

Fast and Easy

Once again, getting approval for a payday loan online is fast and easy. Depending on your lender, you can get approval in 2 hours (the minimum) through another business day (the maximum).

In addition, since you don’t have to “physically talk” to your lender, you definitely don’t need to don business clothes, spend on your transportation and feel the pressure of having a face-to-face discussion. This means savings for your then, both of your time and of your money. And this savings -- regardless of the amount -- would mean so much considering that you’re in need of immediate cash now.

In case your payday loan online provider would need a copy of your pay records, you can always send these documents via email. You just scan them and attach them in an email. Once again you don’t have to spend on faxing services as you can always make use of the wonders of the Worldwide Web.

You see, you can gain access to immediate cash without having to step out of your doorstep. And this is made possible through a payday loan online. With this, you can really say that a payday loan online spells convenience!

A payday loan is an unsecured loan, which can be provided for everyone with a job. You just need to log on to money lending companies offering this type of loan, file your application and wait for the money to be deposited to your back account ready for your withdrawal. It’s fast and it’s easy.

What happens when you suddenly lose your job, thanks to the recession? Well, you cannot and must not default on your payments lest these consequences hound your life until you fully settle your payday loan.

Incessant Harassment

Well, it’s a bit of an exaggeration but nonetheless inconvenient. Money lending companies will employ all forms of communication to make you pay your debts, which can range from phone calls, e-mails, demand letters and personal visits.

Don’t think either that these forms of communication will happen once or twice. You will be subjected to many of these demands until you pay up in full.

Blacklisted, Blackballed

The lending sector offering payday advances is a tight-knit community, with companies servicing a specific area in the country. As such, it can be easy to blackball debtors who default on their payments.

When you apply in one lending company, you never know if and when they have been informed of your bad credit history within the industry. It is bad enough that you were able to secure the payday loan with your spotty credit history with mainstream financial institutions (i.e., banks) but to incur notoriety for unpaid loans within the industry is worse.

Thus, you have to pay your loan even when you suddenly lose your job. Find ways to pay it; communicate with the company to negotiate for easier terms; dip into your savings; sell off some of your assets; find another job; start a small home-based business. Whatever you do, don’t default on your payday advance because you never know when you will need to take out another one.

And don’t forget either that your credit score will suffer, either directly and indirectly. Keep in mind that you will be required to issue a check against your bank account and incurring a bouncing check will be reflected in your credit rating.

Legal Action

You will not go to jail for unpaid debts like a payday loan, that much is basically true. However, this does not mean that legal action will not be taken against your remaining assets by the lending company. They can and they will, again that much is fundamentally true.

When the lawsuit ends in the lending company’s favor, and most of the time it will, you will be forced to settle your payday loan through bank account levies, property liens or wage garnishment. The courts will decide how you pay off the debts depending on your capacity to pay but whatever the method used, your expenses to pay these unsecured loans will definitely increase what with lawyer fees, transportation costs and other incidental expenditures related to civil judgments.

Indeed, when you suddenly face the life of an unemployed individual, it is always best to find ways to find the money to settle your payday loan. Communicating with the company about your situation can be your first step. You will be surprised at how understanding the staff can be!

A payday loan is probably one of the easiest things to secure in storefront lending companies. You just visit the premises, fill in the forms and wait for your money to be deposited to your bank account. No voluminous paperwork, no hassles, and no credit checks. There are, however, certain things you can do to speed up the approval for your payday loan.

Avoid Blind Applications

You may be in a really tight financial bind that you will see the imperative need to apply to as many lending companies as possible. You can probably be excused for your behavior by your family and friends but the lending companies will probably take a negative view.

Thus, you need to avoid sending out blind applications at all costs. You will create a negative impression on the money lending companies, which usually exist in a tight-knit community within a certain locality by the way, which could endanger your application’s approval. It’s always better to apply in one company and then when your application is rejected, apply to another one. It’s a quick process anyway so you will not have to wait for long.

Prepare All Required Documents

To avoid going back and forth, you must prepare all the required documents for the payday loan. These usually include your blank check, employer certification and other papers as required by the company, which are definitely less voluminous than, say, those required by banks for short-term loans sans the use of credit cards.

However, if you are applying over the Internet, you will not be asked for as many papers as storefront companies. Just make sure that the online payday loan company is legitimate.

Fill in All Required Information

Your application can be rejected or, at the very least, delayed on the grounds of incomplete information. It is, thus, very important to fill in all the blanks when you are applying at storefront locations. For online applications, however, you need not worry so much as the system itself will immediately notify you of the missing information and will not accept your application until such time that the data requirements have been satisfied.

In this line, always make sure that the information you provided about your employer are true and correct. This way, your application can be processed more quickly.

If Necessary, Look for a Credible Co-Borrower

There are some lending companies that require a co-borrower for approval of the payday loan. You need to consider the credit standing of that individual, which ought to be relatively good for the payday industry, before considering him/her. Keep in mind that he/she will be paying for the loan in case you default in any way. And speaking of default, be sure that your co-borrower is someone who will help you in times of trouble.

Be Honest

Sure, the lending companies probably are not interested about your uses for the cash loan since they are more interested in your capacity to repay it. With that being said, you have to be honest about the information contained in your application. They might not conduct credit checks as strictly as the mainstream financial institutions but they will conduct discreet interviews with your employer. Even if your office is relatively mediocre, just be honest about it.

Ultimately, your payday loan will be approved by any one of the lending companies but getting approved on the first try definitely beats shopping around!