Payday Loans are the loans which are granted for a very small amount of time on the guarantee that they would be repaid as soon as the next salary or income from their source of earning. Such loans have an extremely high rate of interest and are called by different names such as payday advance, payroll loan, salary loan, small dollar loan or cash advance loan. A payday loan can be offered to anybody irrespective of their credibility. The bank does not see the credit worthiness of the borrower in case of granting this type of loan as it is granted for only 15-20 days and is not long term. The borrower should, however, keep in mind that taking a payday loan would not increase his credibility in the market. He, nevertheless, should have a steady income, permanent bank account and a work experience of at least 6 months to avail this loan.
Online payday loans are becoming more and more popular these days. One the best thing about online payday loan is its simple application process. The application takes less than 5 minutes to complete and the portal is usually open 24 hours a day. The borrower can simply file the application for the loan online and the funds are transferred by direct deposit to the borrower’s account. The repayment of loan in such a case is directly withdrawn electronically from the borrower’s account after he gets his next salary or after his post-dated cheque becomes mature. A list of the Direct Payday Lenders is as follows:
- Check Cash: They give their approval application within 5 minutes by providing loans online or at their offices is U.S.
- CashAdvance.com: They provide an online payday loan once the customer is approved by checking his valid account and not any prepaid or savings account.
- Cash Central: This is one of the oldest payday lenders in the country with a 24*7 online application portal.
- MypaydayLoan: This too provides the customer with an approval response within 4 minutes of a completed application form. It is one of the largest of its kind in the country.
- Blue Trust Loans: It funds loans between $300 to $1250 in almost every state. With a payoff time of 6 months approx.., these loans have no penalty for repayment.
- MoneyLion: They offer loans to almost every state in the country with varying rates and terms in each state. It has loan programs available for consumers on all ends of the credit score spectrum.
- Net Credit: It provides an instant approval decision with no borrowing limits for first timers. Applicants are eligible for $1000 to $10000 loans.
- Maxlend: They have many different loans and terms and credit worthiness is not a criterion which is considered. It offers personal loans up to $1300.
There are some jurisdictions which limit the amount of interest charged on loans including payday loans. Depending on the method used, the annual percentage rate (APR) of each loan may be different. In U.S.A, for example, the Uniform Small Loans Laws (USLL) has fixed the APR between 36% to 40%. The major advantages that these types of loans provide major profitability to the industry, welfare for the households is increased as people who do not require short term loans can avail long term loans easily and it provides a service which is unavailable in the market as the requirement of the loan is usually by people who have exhausted all their other options of buying short-term credit. This type of loans is also criticized by some people on the ground that they drain money from the low-income group communities by charging exorbitantly high rate of interest. Also, in some countries, the collection practices of the lenders are extremely aggressive unlike in countries like U.S where there is a standard collection practice set by the law.