The Ins and Outs on Payday Loans

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Many people know what a payday loan is, but they do not know all the good points and the bad points of a payday loan. Each and every year thousands of people are putting themselves into deeper debt through acquiring a payday loan. For some, a payday loan has never affected them in any way.

A payday loan is a small loan that you obtain from a business or establishment that is not a bank in any shape or form. These companies offer loans that most people borrow just enough to get them through until their next pay period; which is when these companies arrange for you to pay the loan off. There are a wide variety of these companies with different names, but they all operate the same way. Each and every company has their own set of rules, but they are never supposed to surpass the government regulation on interest rates that are set in the state or province that they are operating. Some of these companies may ask for a check or a pre-authorized debit form, so that they are guaranteed to receive their money come your payday. Others require your pay to be direct deposit in order for you to get a payday loan, so that way they know the money will be in the account so they can receive their money.

There are options to either apply in person or online. Some payday loan companies require you to come in to meet in person after filling out an online application to verify your personal identification. Filling out the application is a relatively easy process. All you need is your security number, recent pay stubs, a bank statement showing your earnings, and some photo identification. Not every location asks for all of these things, but be prepared. Other methods of submitting your application include; faxing your application, email your application, apply in person, or fill out an online form.

The negative side to all these payday loan companies is that people can become dependent on them if they are not careful. These companies charge such high annual interest rates and add on additional fees that are not mentioned in the advertising, that some unfortunate people are unable to afford the repayment or have to keep borrowing to make ends meet monthly. In some cases, there are people who are borrowing from multiple companies to keep up with the payments. This type of situation is the same deal as having late payments or late fees. It's the same thing as having constant NSF's, overdraft charges, and monthly fees on your bank account. Another thing that can happen when the customer stops paying their payday loan; they can withdraw the full amount that the customer owes right out of their bank account and they will keep trying until they receive what that customer owes. In some severe cases where the customer authorizes a stop payment to the loan company; the loan company will change their name on the automatic withdraws so they can attempt to get their money back from the customer.

19 Sep, 2011

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