Sunday, May 14, 2006

Payday Loans

These loans are available to consumers in order to serve as a short-term cash advance for the borrower between paydays. Payday Loans have some unique characteristics which set them apart from the traditional bank loan.

First of all, they are usually small in nature, ranging from $100-$1500. They serve to remedy financial emergencies between paychecks, so the repayment duration is very short, typically between 7 and 18 days.

There is usually no credit check required, no faxing of documents, and as long as the borrower meets the requirements for approval, their past credit history does not matter. For this reason, it is very easy for borrowers with bad credit or poor credit, even defaults and bankruptcies, to obtain a payday loan.

Payday Loans are unsecured, because the inclusion of collateral is less of a concern among lenders due to the smaller loan amounts.

Applications can be made over the internet, and sometimes, a loan representative will call or contact the borrower. The approval time is usually very rapid, often within hours of application, with funds transfer occurring overnight or within 24 hours.

If approved, the funds are transferred electronically into the borrowers account.

There is usually a fee, or finance charge, rather than the traditional APR. This fee normally falls between 10%-25% of the amount borrowed. So if someone borrows $500, when they pay it off two weeks later, they must pay $550-$625 total repayment.

Since there are no prepayment penalties, the borrower can exercise their right to payback early, with no added fees.

Often the loan repayment deadline can be extended, or rolled over, but each time, the finance charge must be paid for the extension.

During the application process , the borrower is sometimes required to submit a postdated check to the lender, in order for the lender to deposit and receive payment upon the deadline.


It is typically very easy to qualify for a Personal Loan. An applicant must meet some basic criteria, such as:

Proof of employment or income
A checking account thats been open for a while
Age over 18

The majority of applicants are immediately approved for funding.