Have you ever had a situation when you are saddled with an unforeseen expense and are short of money? It’s a situation where an individual is at the end of his tether and looking for hard cash to tide over the crisis. One of the solutions is to use available credit on your credit card. In case there is sufficient cash available, then a part of your problem is solved. But then there are a vast number of Americans who do not have any credit card or have credit cards whose credit limit has been exhausted. There is also a fairly large number of Americans who do not have credit cards as they are not eligible. You could try tapping a relative or friend for some hard cash, but it may not work out.
In such a scenario the present age, the financial market has heralded a new type of loan called a ‘payday loan’. These are short term loans that are linked directly to an employee’s salary or regular income. They are also available without any form of security, guarantee or collateral. Such loans are directly connected to your pay day. However the cost of borrowing these loans is high. Proponents of these loans justify the high APR as the loan is available in cash immediately to the customer and without any strings. This is acceptable in law and financial discipline as these loans are unsecured. The loans are thus perforce ‘small’ and generally cover a range from $500 to $1500. The silver lining of these loans is they are available to even people with bad credit. However don’t forget the axiom that Payday lending is not available to those Americans who are not drawing any salary and have no regular and fixed income.
Pay day loans have some significant advantages. One of them is that your credit rating or a credit check is not relevant to disbursal of these loans. Also you get cash at a short notice. In addition no lengthy paperwork or filling forms is involved. The applications are easy and concise. One can apply for a loan even on the telephone or the internet. The documentary process in most case can be over in less than an hour. The quick disbursal in 2/3 days is an added advantage. Again no file charges or upfront fees are payable making these loans within reach of most people. Lastly these loans are also available even if you have filed for bankruptcy or have an adverse credit report.
These types of loans have the added advantage of being carried forward by paying a nominal carry forward fee. But there is also have a negative side that cannot be wished away. The first negative aspect is the high rate of interest that is charged on these loans. This high rate of interest is understandable against the background of getting cash easily without any security. It’s an axiom in today’s consumerism that convenience must have a price- that is greater cost.
There are many financial experts who opine against these pay day loans. They feel that because of their high rate of interest the consumer could be walking into a debt trap. Still there are others who feel that such loans need to be stopped as they fleece the customer in the guise of giving quick money.
However on the credit side it must be said that the some government rules have been made applicable to pay day loans. Pay day loans are now governed by state law and are a state subject. All aspects of pay day loans come under the purview of state law. In fact most states do regulate the APR (Annual Percentage Rate) of a payday loan .This is one of the important regulatory practices. The APR charged thus becomes of paramount importance. Though pay day loans come under purview of state law, yet there is an exception. This concerns members of the United States Armed Forces who’s APR and pay day loans are regulated by the Federal Government. This is to protect the Armed Forces personnel from being fleeced because of the special position they occupy in the Psyche of the American Nation.
Having decided on a pay day loan the next step is to search for an outlet that can finance you. The financial horizon is dotted with hundreds of companies who will give you a pay day loan. These companies have mushroomed all over the country. In case you have some difficult in locating such a company then surf the net and that can be your answer. However do bear in mind that the Truth in Lending Act makes disclosure of APR a mandatory requirement. So do insist on knowing what is the APR the company will charge you. But at the same time the law gives due recognition to the fact that as payday loans are short-term unsecured loans the APR can be high. The effect is that payday loans are expensive to the individual. However the disclosure of the APR helps customers get a fair and transparent deal. Lenders cannot take customers for a ride.
Once you have narrowed down your search to a particular company then make it a point to contact the company. These companies are in the market with a definite purpose and help those people who have nowhere to go for a loan. Many such companies are in the field. An example of such a lender is Money Mart.
Money Mart is a loan disburser that has over 1700 outlets spread all across the North American continent. In addition to this company the skyline is dotted with hundreds of such companies for you to choose from. Do carry out a survey of all such companies and you will not be a loser for it at all.
Pay day loans definitely are a great help and have carved a niche for themselves as far as their utility is concerned. They serve a definite purpose. But when you apply for a pay day loan you need to be aware of all the pros and cons. Don’t be taken for a ride. Lastly do not carry forward or roll over the loan too many times. The more you roll over the greater could be the problem for the simple reason that it increases your debt. Notwithstanding this a payday loan will always be a great help and if you really need the money then don’t hesitate to avail of one.
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