A Short Guide to Immediate Financial Aids: Payday Loans

For many people, payday loans are a fast and easy financial solution used to cover unexpected expenses. They are also seen as a way to avoid bounced check fees and late payment fees. These loans, also called paycheck advances, are short-term loans and act as a bridge between the moment of acute need of money and your payday. For an in-store payday loan, the borrower needs to visit the location of the lender and has the option of receiving the loan in person. An online loan gives the borrower the comfort and discretion of processing the loan entirely online. Applications take no more than a few minutes to complete and, if approved, the loan funds are usually transferred to the borrower’s bank account within a business banking day.

When to Apply for a Paycheck Advance?

Most people use the advantages of a short-term loan in emergency cases, such as car repair, medical bills or due monthly bills. Payday loans are useful financial aids, but can get expensive and are to be used only for immediate needs. Therefore, they are not suitable for long-term plans. Before committing to them, it is highly recommended that you carefully consider how urgent your need is, how you intend to use the loan and just as importantly, how you can save money in the future so that you can repay your debt. Cutting back on entertainment expenses, cutting down energy consumption or getting a second job are just a few ways of saving money. It might also be useful to note that payday lending is legal and regulated in 37 states and illegal or not feasible in 13 states.

What Makes You Eligible for Payday Loans?

Lenders have their own set of rules for eligibility, according to the rules and regulations of the state they are in. However, the most common basic requirements to be met include age of at least 18, citizenship or permanent resident status, proof of a regular source of income and an active checking account. Some lenders will perform traditional credit checks as part of the loan approval process, but many will not. Also, applicant information will often be verified through national databases. For in-store payday loans, you will need to present a list of documentation at the lender’s location. In order to make sure you get all the right documents, you should discuss with your lender, as rules vary for each state. For online loans or loans by phone, the application process will sometimes require you to fax in documentation. However, nowadays most lenders have a simplified transaction process with no faxing needed.

While payday loans will be a welcome aid in case of an emergency, it is recommended that you develop a long-term plan for the handling of your finances. Re-evaluating your spending habits, acquiring good debt management and learning about personal finances will take you a step closer to financial literacy. If you possess financial capability, your skills and knowledge will help you make informed and effective decisions in your everyday situations.