Are you overwhelmed with financial problems and debts you want to settle? I think you should know about these types of loans. These are small loans that one can secure within a day. However, they have very high-interest rates. Despite that, they are crucial for meeting urgent financial problems. Because of their requirement, these loans are unsecured types of loans.
Typically, in the US these loan lenders operate from storefronts of a low-income neighborhood. Generally, their customers have poor credit. Sometimes they even don’t have other means of accessing money to meet their urgent issues or bills. The reason behind high-interest rates from these loans is because of high the risk involved.
How to Get this loan
Getting these loans is quite easy. All that is needed is an ID, of which driver’s license can be used, a blank check, this can be from your checkbook, and a pay stub. The stores regularly double as pawn stores. The borrower’s income will determine the amount he can borrow. However, some states have regulations on payday lenders on how much they can lend.
Most of the lenders require the borrower to be over 18 years old to qualify for the loan. A working checking account is also very important for the loan. Proof of income is another requirement well applying for the this loan. These loans take the shortest time to be processed. They can take even 15 minutes to be approved. Often the borrower may write a check on behalf of the loan amount as well as a lending fee.
For anyone thinking of applying for these loans, it’s good to think beyond the requirement. Sometimes interest rates should be number one consideration. According to annual percentage rates payday loans exceeding 500% and sometimes 1000% is not uncommon.
These loans are quite expensive because of their interest rates. This calls for care to be undertaken for these loans. Some states have put regulations on payday loans. They regulate how much they can lend and charge for the loans. New York, for instance, has banned the payday lending practice altogether.
Advantages of these Loans
Easy to Apply
Their process is the easiest to go about. This makes these loans to be accessed easily. They even don’t require much information. They can be processed within hours, unlike other loans.
These loans don’t require a lot of paperwork for approval. Just an ID and a proof of income, and you are good to apply for the loan.
Disadvantages of these Loans
Their interest rates make them very expensive. They set high-interest rates because they are unsecured and the risks involved.
The Debt Collecting Process Can be Ruthless
Not all the time people are able to pay back the loan on the agreed time and day. If this happens, the debt collectors start to contact the borrower. In the case of these loan lenders, they can be harsh and ruthless.
These loans are meant to help those with urgent financial issues. Sometimes even for those who cannot access the formal bank loans from federal-recognized institutions. These loans have however helped a lot of people.