The FAQ About Payday Loans

Today we live in a credit-based society. The term living paycheck to paycheck has all new meaning in this day and age. Because the cost of living has increased so dramatically in the last 10 years, it is next to impossible to live on paycheck alone. A lot of people do not have the resources to build a solid credit foundation from which to draw on when the paycheck runs dry. Is there a solution for these credit poor individuals? There is, and it is called the payday loan. This article is going to highlight the basics behind this new credit resource called the payday loan, and it will help you discover if the payday loan is really a cash flow solution for you.

What is a payday loan?

A payday loan is also knowns as a paycheck advance is a short-term loan between the lender and the borrower. Lenders are commonly referred to as payday loan operators. Typically they can be as low as $100, but can go as high as $1,500. They can often be referred to as cash advances, though that term is also referred to as cash taken against a pre-arranged line of credit like a credit card.

How does a payday loan work?

The borrower will go to the payday loan operator and provide an application for the process. There are generally requirements for this, but we will cover that later in the article. The borrower will give the payday loan operator a post-dated check that will total the amount of the loan plus the operator's fee or interest. Fees generally range around 15%. The maturity of the payday loan will occur around the time of the borrower's next payday. The lender than cashes the check or withdraws funds electronically from the borrower's account.

What are the requirments for a payday loan?

Lenders typically want to see that you have an active checking account in good standing. You also need to have an income source, for which you have an actual payday. Generally they will require verification of this such as pay stubs or bank statements. This is to prove you will be able to cover the post-dated check that you provide for them. You also will need to be of age of majority in the area you are looking for the payday loan.

Where can I get a payday loan?