Friday, July 28, 2006

What Is Payday Loan?

You may have heard it, you may not. You may think that this is a new breed of loan. You may also hear another name for it. Some people call it cash advance loan, payroll advance loan, paycheck loan, or just check loan. Which ever name you have ever heard of, payday loan is quite new for some of us.

So, what is payday loan?

It´s a very short term loan where the money amount is small and quickly payable. It works like this. You apply for a payday loan, you get the money which is normally around $100 - $500, and then when you get your paycheck you repay back along with the interest.

Now, that doesn´t sound new for you, does that? Yes, payday loan has been there alongside human history. However, recently some financial institution try to make this as another type of loan that is regulated and available for public.

One thing you should remember about payday loan is that the interest rate for most payday loan is very high compared to other types of loan. The interest rate can be around 15% - 50% for a term, and the APR could go as high as 400%. Some people call it as “shark loan”.

If the interest is so high, why should you try to get one?

Payday loan is useful for you if you have an emergency need of cash. Sudden medical bills, uncontrolled phone bills or electricity bills, and any other unexpected and urgent cash problem could be handled with payday loan. Of course you have to deal with the interest later on. But this kind of loan can be a life saver if used wisely. Moreover, payday loan is easy to apply and mostly you will get the money in 24 hours if not less.

Of course, it is always a wise move to ask a loan from friends or relative at first. Mostly you will not get any interest from them. However, if you are just stuck, than payday loan is the way.

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Blogger Pearl Parker said...

Really you have explained about payday loan very briefly. It is a common question to many people but it is helpful , who don't know what is a payday loan and also using of payday loan. I like this post very much and also it is advisable to make useful posts regularly.

3:06 AM  
Anonymous What payday loan said...

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5:32 AM  

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