Payday loans are small loans taken out at an extremely high interest rate, intended to tide borrowers over a crisis. The loan is pinned to his next payday cheque and is usually arranged over a period of about two weeks.
The lenders are typically small lending shops, or internet stores that offer this service. These loans are proposed for the kind of life crisis that requires a small amount of cash immediately, without any delay. This should never be an attempted way out for paying debts in arrears, but rather for the unexpected emergency, such as an accident or an urgent trip to visit a dying relative.
This is the way it is normally arranged between lender and borrower:
The borrower has to go into the store and fill in and sign the agreement forms. He must provide proof of income and is then required to make out a post dated cheque in favour of the lender. If the loan is not repaid by the borrower on or before his next pay day, the lender is entitled to cash the cheque. Should the cheque bounce and the borrower be unable to repay the loan, he will be offered an extended time in which to repay the loan, but he will incur all the penalties of a bounced cheque.
Online lenders give the borrower the advantage of being able to ‘shop around’ for the best terms and conditions. [It is not always possible to do this by walking or driving around from shop to shop.] There are usually forms for the borrower to download and to fill in, giving personal information, social security numbers, and verification of employment, as well as banking details.
The signed paperwork is faxed back to the lender and a direct deposit is made into the borrower’s bank account.
In the USA at least 13 states, which have usury laws, have made payday loans illegal. The rest have got around these laws, often by forming relationships with certain banks that do not have a usury limit. In those US states where payday loans are legal, lenders typically charge 15% -30% of the borrowed amount for the approximately two-week period until the next payday.
In parts of Australia the maximum interest allowed is 48% including all fees.
In most of Canada the maximum is 23%. There are also limitations on the amount the client is allowed to borrow. Not more than an amount equalling 50% of his next pay cheque is allowed.
In the UK a payday loan typically costs the borrower 20% interest for two weeks. However, as there is no law against rolling over the debt, the borrower could end up paying more than 120% if he is unable to pay for six months.
Payday loans are a very controversial issue and many if not most consider this form of lending to be exploitative of the most financially needy population sectors. However, there is no doubt that in absolute crisis, it may prove, in the short term, to be the only way out for some people.
01 JanPayday Loans
29 AprPayDay Loans – Tips For Getting Approved
I am sure that you have heard all those commercials about getting payday loans to cover unexpected expenses. You see the commercials, you hear all of the hype about them. The truth is they can be a very good thing, but you need to do some homework of your own beforehand. There are state laws that govern the payday loan industry and they vary from state to state. In fact, only 37 states are licensed to make these type of loans. A credit check is not required to receive a payday loan. So even those with negative credit can qualify.
Remember, the fees associated with a payday loan can be quite high. Especially if you do not repay the loan in a timely manner.
Here are some tips for you:
* Know the laws in your state: You can find this information online fairly easily.
* Be prepared: You cannot get a payday loan without a valid bank account. Some lenders prefer an account that is at least 6 months old. You will need your bank name, account
26 NovSecured Loan – How the Recent Credit Crunch Has Effected the Market
The recent credit crunch has had a major effect on the secured loan market.Several Lenders have pulled out and many have tightened their criteria, which means that it is now more difficult to get a secured loan, especially If you
are looking to Self certify and have no proof of income.There are several reasons for this, as has been widely reported, the American Market has had major problems with the sub-prime market. This has led to many banks and institutions having to foreclose on loans made over the last few years. One of the culprits, it would seem, is the self cert market, with several authorities suggesting that the loans made, were made without proper
checks on income and affordability. This has led to high levels of debts and arrears and ultimately foreclosures on an unprecedented level.
The American credit crisis has had a knock on effect in the UK, with several banks/ lenders within the secured loan market either closing their doors or tightening their criteria. This is due to the fact that several lenders have been backed by American / foreign investment companies. For the self employed /self cert market the situation is worse, because their are now only a few lenders that offer secured loans to the self cert market and generally only upto 75% loan to value ( LTV ). There are lenders that will lend to higher LTV but the criteria can be quite restrictive.
The UK secured loans market is going through a transition, with changes occurring almost daily, opinions are divided as to the possible outcome, but general consensus is that the sector will ride the storm and over the next few months the market will stabilise, and once the confidence has come back into the market, we should see a relaxing of the criteria and possibly new lenders
entering the market.
Alan Reed writes for the following websites, http://www.chrysalisfinance.co.uk, http://www.e-securedloans4you.co.uk and http://www.debt-consolidation4you.co.uk
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