PAYDAY LOAN falls under the category of unsecured loan. Being an unsecured loan availing of such a loan will entail a relatively higher interest plus the maturity of the loan is quite short. You can say that payday loan is quite similar to a credit card cash advance considering its easy accessibility and high interest rate. The only difference is that borrowers need to provide payday loan provider a postdated check with the same amount as the loan. It is therefore wise for the borrower that prior to availing a payday loan, they should be 100% sure that they can repay the principle plus the interest at the agreed repayment date. Else, the borrower might end up facing additional interest and charges on the loan.
Payday Loan: Things to be Aware of
Although payday loan can be quite a life saver, you should be aware of a few red flags prior to BORROWING from MONEY LENDERS that caters to this kind of loan. First, this type of loan should not be used for emergency purposes because of its high interest rates and loan charges. Unless you can be sure that you can repay the loan at the agreed repayment date avoid applying for this type of loan. Payday loan is specifically tailored to be short termed and going beyond the allotted maturity may cost you a lot of money. Make Payday loan your last resort. It would be best to scout for other financial sources prior to finally deciding to use payday loan. Be aware that because of the easy accessibility of payday loan, most people borrow from these types of lenders simply out of habit. Be aware that there are cases wherein payday lenders would cash in the post dated check issued by the borrower. This puts the borrower in a less than comfortable position relative to his financial situation. it is not surprising for payday loan to gain popularity especially to individuals who are in deep financial problem but the fact still remain that payday loan companies get their biggest profit from interest incurred by borrowers who could not pay their loan on time.