Payday loans are convenient for people with financial emergencies. If something has happened and you need money to sort it out right away, you can take a payday loan and pay it back as soon as you get your salary. Many people take advantage of this loan service even when they don’t need the money urgently. If you are not careful payday loans could cause you serious financial issues.
What are the requirements of a payday loan?
Most payday loan lenders demand only few qualifications from an individual for them to be able to apply for a payday loan. Your must be age 18 and above to be able to create an account in any payday loan site. They ask for any form of identification that provides your age and origin. You can provide a national ID, social security number, passport or drivers license. Your identification must be valid. The second critical information is proof of income. The lenders want to ensure you have the ability and finances to pay back the given loan. You can provide your past income cheques or work contacts. The last requirement is a checking account where they will deposit and accredit their loans.
Lenders will verify your income, check your bank account and make sure your identification is valid, then approve your loan request. The money is then deposited in your account and you receive an email of message on the term of service, interest and the payment deadline which is usually within 30 days.
The amount you qualify for depends on the lender’s terms of services. Some lenders can give you as much as your income, others offer only a limited amount. Payday loans accumulate interest as soon as you receive the loans. The interest does not grow between the period of receiving the loan and the payment deadline. If you don’t pay the entire amount on time, interest starts accumulating on the funds you owe the lender. When you pay your loan early, you increase the chances of qualifying for a bigger loan.
Payday lenders do not check your credit card before approving loans. This means you can get a loan even when you have a bad credit. Payday loans activity will not appear on your credit card; instead they verify income through your bank account as their credit check. Your payday report therefore appears on the bank statement. Some credit card companies use the bank statement to make their credit card reports. This means if you don’t pay your payday loan on time, it may appear on your credit report. With a bad credit report, you will have less access to bigger and more useful loans from banks.
As long as you pay your payday loan on time, it will not affect your credit card score. It is best to you avoid taking payday loans unless you have a financial crisis or emergency. Look for an alternative before settling for payday loans. You can take a credit card, insurance loan an advance, making sure payday is your last option