Why Payday Loans?
Life is unpredictable and can surprise us with money woes we didn’t anticipate. One day, you may have plenty of cash on hand, only to find yourself in a financial bind the next. When it feels like all hope is lost and your wallet has suddenly gone lean – that’s when the need for a loan often arises. But how do you go about securing one?
Installment Loan Versus Same Day Payday Loans
When you decide to take out an installment loan, it is essential that you understand the repayment terms. An installment loan can last anywhere from a couple of months up to 30 years, during which time you will be required to make at least two payments in order for your debt to be satisfied. In other words: by taking out this type of loan, you are committing yourself and your finances over a specified period; hence why they call it an ‘installment’ loan!
A Payday loan is strikingly distinct from an installment loan. Generally, a small sum of money that needs to be repaid on the borrower’s next payday is characteristic of this type of loan; hence, it arrived at its name due to being taken and returned upon receiving one’s wage.
Payday loans are characterized by a few key features, some of which include:
1. Amount Involved: Payday loans are typically much smaller than installment loans due to the fact they must be repaid with the borrower’s next paycheck. Depending on a state’s legal limit, this amount usually ranges from $100 – $1,000. This ensures that borrowers do not face unmanageable debt levels when taking out payday advances.
2. Payment Day: An attractive advantage of this loan type is that the repayment date has already been predetermined—it falls on your payday. This means there’s no option for making installment payments with a payday loan; you are required to settle it in full and on time.
3. Lender’s Collateral: Payday loans are secured not by a borrower’s property, like installment loans, but rather by their income. Therefore, when lenders ask to access the borrower’s account either by providing them with a check against their next paycheck or granting electronic access to their bank account – it is for added security and convenience. Through this accessibility, Payday loans become easier than ever to receive and payback!
Do The Features of Payday Loans Support 6 or 3-Month Payday Loans?
People often claim that they intend to obtain a 6- or 3-month payday loan. This is because of their desire for a small sum as same-day financing, which must be reimbursed within either three or six months. But does the size of the loan necessarily classify it as a Payday Loan?
Payday loans must be paid on the borrower’s next payday. If the payment is made in 3 or 6 paydays, it is no longer considered a Payday loan and would instead fall under an installment loan classification. With these types of loans, payments are divided into multiple installments that span over several weeks or months.
When considering a Payday Loan, it’s important to remember just how generous these lenders can be. For instance, you may receive more money than your monthly salary or wage allows for in the form of short-term 3 or 6-month installment plans. To put this into perspective, this is not simply a Payday loan; it’s an investment that provides extra funds when times are tough, and paychecks fall short – making them truly invaluable!
Although the backstory for both Cash Advance and Payday loans are similar in that they are based on a borrower’s ability to earn, this does not mean that all loans of this nature should be classified as Payday loans. It is important to note that even car loans come with the caveat of being approved against a borrower’s earning potential – yet it would be wrong to assume such an agreement constitutes taking out a Payday Loan.
Utilizing the wrong term – like a 3 or 6-month payday loan – may be common, but it is far from an accurate description. This type of loan does not fulfill all the criteria that are synonymous with true payday loans and should, therefore, not be confused as such.
Payday Loan Requirements
If you’re hoping to be accepted for a same-day payday loan, there are specific requirements that must be fulfilled. These include:
– A Bank Account: Opening and keeping a good banking record is non-negotiable for any borrower. A reputable financial institution demands this of its customers in order to ensure the success of its loan application process.
– Regular Income: Although employment is not necessarily a requirement, borrowers must demonstrate that they have a consistent income to be considered eligible for a payday loan. This could come from pension distributions, or regular payments from an estate beneficiary – the important factor here is the reliability of the funds. Once lenders can rest assured that there will be dependable money coming in at set intervals, then you’re one step closer to obtaining your payday loan!
– Identification: Applying for a payday loan is futile unless you can prove your identity with an authentic Social Security Number or similar form of identification.
– Age: Any individual under the age of 18 is deemed a minor and, therefore, ineligible to obtain a payday loan. To qualify for such financing, you must be at least 18 years old.
– Residence: To protect against fraudulent activity, a payday loan recipient is required to live in the state of issuance. Each state has its regulations that make compliance even more necessary.
In addition, individuals will need to ensure that they have not declared bankruptcy or are part of the military/a dependent on a service member in active duty. There may be additional requirements depending on certain circumstances.
Payday loans, which typically range from $100 to $1,000 and are based on a borrower’s next payday or salary payment date, offer an ideal solution for those who need cash in a hurry. While 3-month and 6-month terms may be common, it is important to note that these do not meet the requirements of actual payday loans since they involve installment payments rather than requiring full repayment at once.
