Did you know that payday loans are small, short term loans? These types of loans allow you to receive relatively small amounts of money before your next paycheck arrives, and they typically need to be paid back by your next payday. Although payday loans are not the same as installment loans, they are beneficial in a variety of ways.
In order to get a short term loan, you must go through an application process. When you fill out the application for a payday loan, you are required to provide proof of income or employment, such as pay stubs or bank statements, to prove that you are able to pay the loan back. Once you actually receive the loan, you must pay it back within approximately 13-30 days, and a specific due date is set by the lender based on how frequently you get paid. This is in contrast to installment loans, which allow you to repay your loan with a set number of scheduled payments.
Although you are required to pay your loan back by a certain date, payday loan lenders cannot legally use the criminal process against you to collect the loan. In fact, a small percentage of payday lenders have threatened criminal prosecution in the past, but this has since been condemned by the CFSA, or Community Financial Services Association. In addition, some jurisdictions limit the amount of interest that lenders can charge in order to prevent usury. With these laws and regulations in place, you do not have to worry about lenders taking advantage of you.
There are several benefits of payday loans. Although these cash loans are not the same as installment loans, they provide relatively small amounts of money until your next paycheck arrives, and lenders cannot do anything illegal to collect your loan. As a result, payday loans are beneficial in a variety of ways.