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26 Feb 2014
If you have been desperately in need of money in a short period and you dint know what to do or you are in that position now here is something that will be worth your while.

Introducing pay day loans,

Take it as a short term loan given by a lender to a person for a short period of time, the borrower writes a postdated check with the amount of money he wants and an additional sum as fee, the borrower also pays APR- annual percentage rate, this is the cost of interest paid by the consumer on an annual basis as a percentage, the lender either cashes the check on the day agreed or the borrower pays cash on the agreed date and takes back his check. These days payday loans can be transacted online, borrowers fill in an application form and send pay slips or proof of employment via fax. The loan is deposited to the borrowers account and the loan repayment is done on the borrower’s next paycheck electronically.

Security is usually in the form of recent pay slips or current employment statements. There are jurisdictions stating usury limits (unreasonable and excessive rates of interest) this limits the amount of APR- annual percentage rate lenders can charge. on Jan 23 2014 an article by Reuters reported that a U.S. online lender Western Sky Financial LLC had agreed to pay a $1.5 million penalty and provide refunds to New York borrowers on loans for which it charged interest rates as high as 355 percent.

These are short term loans

Pay day loans are meant to be paid after a short period of time which is in many cases the borrowers next pay day thus the term payday loans. Many people who use payday loans are the low and middle income earners who do not have security required in banks. 

While payday loans are a good idea for a short term money fix problem say when you need to pay bills on time and when you are short of money and really need to make a purchase they have a disadvantage in that they have a high interest pay back fee. It is advisable to research on lenders and understand well how payday loans work before you borrow from any lender. Interestingly some countries and states in America have made it illegal to operate on payday loans.

Reasons for preference of payday loans

  • The advantage of payday loans over bank loans or credit loans is because they are the fastest and an easy way for people to get money.
  • Payday loans are less expensive as compared to giving a bounced check whose fees would be on the higher side.
  • No security is required to get money only a pay slip or proof of employment.
  • In the event where a borrower is not able to pay the loan in time, they can have the loan extended but there is accumulation of fees after lapse of agreed time.
  • Generally payday loans are great when you have a financial emergency but are not a solution for a money problem as the interest paid after securing them is high.


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