Who is eligible for payday loans?
At one point or another, we all need financial assistance quickly to meet our immediate unforeseen needs. These immediate needs may take the form of hospital bills and other expenses such as the unexpected death of a family member or car breakdown, among others. Under such circumstances, you may be caught pockets empty in between paychecks. If you’re short of borrowing options, payday loans can come in handy. Payday loans, also known as cash advance, means a type of temporary unsecured financing offered to the borrower; and on his next salary, the loan should be paid back.
Payday loans Online take a very short time to process and be approved, allowing you to access funds instantly in your checking or savings account. These loans take a short time to mature, usually during the borrower’s next payday.
Borrowers applying for a payday loan do not have to put up their personal property or any asset as collateral as the loan is generally unsecured. This implies that the borrower is in no way risking his assets in the event he is unable to pay back his loan or delays in making payments.
The borrower can access payday loans from payday lending stores whereupon maturity of the loan, he is expected to make repayment in person on the agreed date or through a more recent innovation of payday loans which allows consumers to apply for a loan on an online platform. Online payday loans require consumers to complete a loan application form and if it’s approved, the funds are disbursed directly into the borrower’s personal bank account. An auto-debit agreement is also arranged so when the loan’s due date arrives, the repayment amount is automatically taken from the borrower’s account.
Eligibility of payday loans is quite simple as you are only required to meet few requirements to qualify for the loan.
Borrowers willing to apply for a payday loan must be of legal age (18 and above). This means that they are in a position to make sound decisions and judgments.
- Source of income
To be accepted for a payday financing, employment is not necessary as long as you have a stable or permanent income source. This acts as a guarantee for your lender, assuring him that you’re in the financial state to pay your loans promptly.
Upon approval of payday loan application, the money is transferred to your checking or savings account instantly. When the loan matures, money will be electronically withdrawn from your account as well. Therefore, before applying for a payday loan, you must have an active savings or checking account.
You are expected to give your recent numbers for Social Security or Individual TIN to qualify for this type of loan.
Most payday loan lenders do not perform credit checks. This provides a rare opportunity for borrowers with bad credit to apply for this loan. However, the borrower’s creditworthiness may be used to make lending decisions such as the amount of loan to be extended or the interest rate to be charged.
Payday loans are a good deal to many.However, with great advantages come drawbacks. Payday loans also have their drawbacks.
Exorbitant interest rates
Payday loans are generally unsecured. This means lenders face great risk in case the borrower fails to make payments. Hence, they charge very high interest rates which reduce the risk of potential loss.
Credit score impacts
Payday loans are typically expensive, hence it is not uncommon to delay or default payment altogether. This has a bad effect on the borrower’s credit rating, which would intimidate the borrower’s financial capability in the next few years.