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What is a Payday Loan?
A short term loan to provide you with cash when you need
it most, usually between pay days! It is designed for emergency
situations when you are short on funds and need money fast
for unexpected expenses, extra bills or urgent cash needs
you may experience. No collateral is required and lenders
regularly accept people with bad credit. The money is directly
deposited into your personal checking account, then the
payday loan funds (plus a fee) are taken out of your account
at the end of the loan.
Some of the criteria required by most providers in order
to qualify:
• Currently have a job ( or receive regular income
)
• Make at least $1200 per month
• Are 18 years of age or older and a U.S. citizen
• Have a checking account
• Other requirements may apply
Check cashers, finance companies and others are making small,
short-term, high-rate loans that go by a variety of names:
payday loans, cash advance loans, check advance loans, post-dated
check loans or deferred deposit check loans. Usually,
a borrower writes a personal check payable to the lender
for the amount he or she wishes to borrow plus a fee. The
company gives the borrower the amount of the check minus
the fee. Fees charged for payday loans are usually a percentage
of the face value of the check or a fee charged per amount
borrowed - say, for every $50 or $100 loaned. And, if you
extend or "roll-over" the loan - say for another
two weeks - you will pay the fees for each extension.
Under
the Truth in Lending Act, the cost of payday loans - like
other types of credit - must be disclosed. Among other information,
you must receive, in writing, the finance charge (a dollar
amount) and the annual percentage rate or APR (the cost
of credit on a yearly basis).
www.ftc.gov
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