When a person considers taking out a loan, a payday loan is an option many people consider. People who have never taken out a payday loan in the past may have several questions about the process and procedures of a payday loan, as well as inquiring if this type of loan is right for them and their situation. This section of Frequently Asked Questions will address many common questions that people often have concerning these types of loans.
Do you have to have good credit to qualify for a payday loan?
Good credit is not required in order to qualify for a payday loan. This is one of the reasons so many people seek out this type of loan service. Many people need money to help them through emergency situations and a payday loan is often the only option for people who have poor credit scores. People who have not yet had a chance to establish their credit will also be able to qualify for a payday loan as long as they meet the other criteria required by the loan company.
What can a payday loan be used for?
Payday loans may be used for a variety of wants or needs for the person applying for the loan. These loans may be used as a down payment on a vehicle, to pay for childcare expenses, birthday or holiday gifts, or simply to help a person catch up on past due bills. Payday loan companies may have some restrictions as to what the loan may be used for; but typically, it is at the person’s discretion to use the loan money as he or she sees fit. Some people use the loan payout to pay for vehicle repairs or to replace an appliance that has finally given out. Others will use the loan money to take a weekend getaway trip or to purchase groceries when money is short in between paychecks.
How much money can a person get through a payday loan?
The initial payday loan a person receives will be a lower amount than what a person is able to receive after making faithful and timely payments on the initial loan. Each payday loan center varies on how much they extend to customers; however, the average amount for a first payday loan is five hundred to eight hundred dollars. This amount may be increased for future loans if the customer remains in good standing with the loan company. The payday loan may also be renewed if it is deemed necessary by the customer.
How does a person apply for a payday loan?
There are a few different ways a person can apply for a payday loan. An individual may apply at an online website a loan company has, or go into a payday loan store in the person’s local community and fill out an application. People who apply online may be required to fax in required documents and references in order for the loan to be processed. Applying online is often a preferred way for many people to apply for a payday loan since it eliminates the driving time and waiting in line to fill out an application in a store and to receive an approval.
People may also apply over the phone and answer the questions asked by the customer service agent of a payday loan company. This option is offered by several payday loan companies, but not all of them. If a person does choose to fill out a loan application over the phone, the individual will then need to email or fax in documents and identification in order to complete the application and document-submission process. Loan responses for approvals are usually given within twenty-four hours or less once the application and documentation has been successfully completed and submitted.
Are payday loans considered traditional loans?
Payday loans are not typically considered traditional loans in comparison to the type of loan that is extended by a bank, credit union or a traditional lending facility. Payday loans are short-term loans that are also referred to as cash advances. These loans are designed to help people financially to make it through an urgent or crisis situation.
Many people often come upon a time where money is short in between paychecks. When this happens, seeking out a payday loan can provide people with immediate cash so they can resolve their situation. Payday loans are not based upon a person’s credit score; but they are based upon a person’s income and ability to repay the loan in short installments.
How is a payday loan paid back?
A payday loan is a type of loan that is based upon a person’s income. Each payday loan center operates under different specific regulations, but the majority of payday loan companies have standard procedures that they follow.
A payday loan is generally paid back each time a person receives a paycheck. When a person applies for the loan, the individual will pay back a portion of the loan out of his next paycheck. Some loan companies will allow the loan to go a period of one month or forty-five days before the individual is required to make the first installment. The company can set up the process to have a direct deposit amount subtracted from the individual’s checking account or the person can go to the loan company in person (if it is local) and make a payment. People can also write post-dated checks to a loan company and the company cashes the check on the appropriate date. If the person’s check bounces, the loan company has the right to take legal action against the person.
What are the requirements to receive a payday loan?
The primary requirement to receive a payday loan is that there must be a stable source of income. Most payday loan companies require a person to be employed and to have been employed with the same company for a period of six months or longer. Some payday loan companies have options where a person can use social security, disability and child support as a source of income.
Proof of income may be shown through paycheck stubs, direct deposit slips or another form of verifiable electronic funds transfer. In addition to proof of income, the individual will also need to show a state photo identification, social security card and proof of residence. The person may also be asked on the application if he or she has taken out a payday loan before and if the loan was paid off in a timely manner. Credit checks are rarely performed by a payday loan company due to the fact that the loans are short-term loans that are paid back in easy installments each time a person gets paid.
Personal references and names and phone numbers of immediate family members are also required by some payday loan centers. All of the required documents may be submitted through fax machines or in person.
How is a payday loan renewed?
When a person fills out an application for a loan renewal, the application is processed and then receives an approval or rejection notice. Anyone can apply for a renewal and filling out an application is free of charge. Renewals are typically granted after an individual has made a few faithful payments in a row. At this time, it is not uncommon for the payday loan center to call the person and ask if he or she would like to renew the loan. The renewal amount is added on to the total amount of the loan and the person continues to make timely payments each time he or she gets paid, or as according to the individual’s loan contract.
What happens if a person is late making a payday loan payment
Each payday loan company will have a clause in the contract that addresses late payments or loans that are in default. How a late payment is handled is up to each specific company. It is always a good idea to fully read the contract and to make sure you understand any applicable penalties for late payments or for failure to fulfill your end of the contract before signing a payday loan agreement. Each loan company has the right to pursue legal proceedings with any customer who fails to make payments on time.
If a person knows he or she is going to be late making a loan payment, it is wise to call the company and explain the situation as soon as possible. Many companies are willing to work with people who are upfront about their specific situation and will work to help the person out of tight situations. Sometimes, the company simply may offer to renew the person’s loan and this will let the person skip a payment. Speaking to the loan company and understanding the contract are essential.