There are a variety of payday loans, including the small term, short term and long term. Each of these has a variety of names associated with them as well, including payday loans, cash advance loans, check advance loans, post-dated check loans and deferred deposit check loans. But they are essentially the same thing; they offer consumers a chance to get the relatively small amount of money that they may need to pay off a debt that is just lingering.
How to go about securing a payday loan
Getting a payday loan is not a complicated process, although it may seem to be to those who have to stand in line waiting for employer verification, checking account information, reference checks and the like. Check-cashing facilities and finance companies are both eligible to award a payday loan, but it would behoove the borrower to check carefully the terms of such a loan before signing an agreement that he or she is not completely aligned to.
A payday loan is written against a consumer's bank account. As such, it is usually for the express purpose of paying something that came up suddenly or between a pay period. Borrowers write a check to the agency that awards them the loan. They post-date it up to one month from the time that the loan is received. Flat fees, typically around 25 pounds for every 100 pounds loaned, are added to the balance and the check amount. For example, those who borrow 100 pounds would write a cheque for 125 pounds, and would leave the payday office with 100 pounds.
Repayments
Consumers who find themselves unable to pay the amount required when it is due, they can extend the loan, which will invariably increase both the interest rate and the fee involved. But this can lead to a relative dependence on payday loans, increasing the likelihood that they will not be able to get out of debt satisfactorily. In this case, a loan specialist would recommend that the consumer in question simply declare bankruptcy and avoid any further influx of debt.
One reason that declaring bankruptcy might be a better idea is the fact that lenders can and will sue those who do not pay, and the last thing an already-distraught consumer needs is another financial burden to carry.
