Payday Loans - Targeting the Young?

If you are crunched for cash before payday, you may be tempted to avail yourself of online payday loans. What are payday loans online? Are they the quick cash option they advertise? Is using payday advance loans a good idea for your budget?

What Are Payday Loans?

Payday cash advances and loans are credit you take out in advance of a pending paycheck. Your paycheck is the collateral that you place in order to qualify for the loan. You can find online payday loans, as well as paycheck advances stores around the area.

How to Get a Payday Loan

While every company is going to have slightly different processes and requirements for their instant payday loans, there are some standard procedures that most companies follow.

Eligibility

Most payday advance loans, especially online payday loans, have these particular requirements. In order to be eligible for payday loans the applicant must be a legal United States resident who is over eighteen years old. Applicants also have to have an active checking account, and the loan company will be checking on this. People with outstanding payday cash advances that have not be paid back yet must pay back those previous loans before they can apply for another loan. There is also usually a minimum monthly income requirement, usually of around $1,000.

Application Process

The application process is going to vary, depending on whether the applicant is applying for payday loans online or in a free standing store. For online loans, the applicant will fill out a short application, including their phone number. Once the application is approved, a representative will contact the applicant, telling them how they will get their money, and the repayment details.

Applying for payday loans at a store is simply a process of going to the loan store. They will probably require proof of income, which can be the last two paycheck stubs. You will fill out an application, often accompanied by writing out a check. The check will include the cost of the fee for the loan. The company agrees to hold the check until the scheduled payday. At that point, the customer can repay the loan, or pay for an extension, depending on the company's policies.

Rate for Payday Loans

Of course, borrowing money against a potential paycheck is a big risk for the loan company, and as such it will cost. Payday loan interest rates are usually quite high. On top of that, the loan company will probably tack on payday loan fees as well, which are separate from the interest rate. You may be able to find payday loans with low fees, but plan to pay a high interest rate in return. While most states in the United States have laws putting an upper cap on the APR for any type of credit or loan, these companies get around these laws by operating through banks chartered in states that do not have such laws. So there is little to no limit on the interest rate of payday lenders.

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