How You Qualify For Payday

The number of people who live paycheck to paycheck is staggering. The Pew Research Center found that almost 20 percent of American households are in debt, and more than half of these households have at least $1,000 in credit card or other consumer debt. This makes the need for easy access to cash even greater — especially when a short-term loan can offer relief from crippling financial stress. 

But what exactly is a payday loan? How do they work? And why is there such a high demand for them? Read on to find out and try these payday loans.

What Is a Payday Loan? 

A payday loan is a type of small, short-term loan. They’re usually issued by companies called “loan shops,” which operate with no bank involvement. A lender will make an advance against your next pay check, typically ranging between $100 -$500. You then repay this amount plus interest over time. Usually, the repayment period lasts one month; however, some lenders may extend it to two months if you qualify (or three months if you’re a veteran). You must try these payday loans.

If you don’t repay the loan within the specified timeframe, the lender has the right to report you as delinquent to credit agencies. While this will impact your overall score, it won’t result in any collection actions being taken against you. However, if you miss multiple payments, the agency could start reporting your account as overdue. 

How Do Payday Loans Work? 

Many people believe payday loans are predatory lending tactics, but this couldn’t be further from the truth. Most lenders are reputable businesses that take great care to ensure customer satisfaction. In fact, most of them have strict policies and procedures in place to guarantee accountability and quality service. Here’s how they work: 

When you apply for a payday loan, you fill out a simple application form. It asks for basic information like name, address, phone number, and employment status, as well as details about your current financial situation. You’re also asked to submit proof of income so the lender can verify that you’re capable of repaying the loan. 

Once all of this is done, the lender will determine whether you qualify for a loan based on the following factors: 

Your income 

Your net worth 

Your savings (if applicable) 

The average length of the loan 

Whether you’ve ever defaulted on a previous loan 

What you plan to use the money for 

After assessing your eligibility, the lender will either approve or deny your request. If you’re approved, they’ll send a contract to sign. Once you agree to the terms, the lender will transfer the funds into your checking account and send you a prepaid debit card to use for future transactions. 

Payday loans tend to come with fairly standard fees. These include a base rate of interest, processing cost, and late payment penalty, among others. But in order to protect customers from unfair practices, many lenders waive these fees if you’re experiencing financial hardship. In addition, some lenders offer special deals for military members, veterans, and their dependents. 

Who Uses Payday Loans? 

There are plenty of reasons why someone might seek out a payday loan. Many first-time borrowers turn to them because they lack the necessary funds for an emergency expense. Others use them to bridge a gap between paychecks. Still others simply prefer this option over alternative options, like pawning items or taking out a second mortgage. 

For example, in 2014, the Federal Deposit Insurance Corporation reported that 40 percent of payday loan borrowers had used the services multiple times. In fact, a whopping 42 percent of borrowers said they used the product to cover recurring expenses. 

This leaves us with the question: Why do so many people turn to payday loans? In part, this stems from the fact that short-term borrowing options are hard to come by. According to the Consumer Financial Protection Bureau, only one in five Americans owns a credit card, while fewer still own a home equity line of credit. For those who do have access to traditional sources of credit, many of them are saddled with high monthly payments or have very little leverage when dealing with creditors. 

Furthermore, payday loans provide immediate relief from financial distress. When you’re struggling just to get by each week, it can feel like you’re drowning. But when you’re forced to borrow money to buy necessities, you suddenly realize how much of your life is controlled by something outside of your control. 

As a result, there are many households that struggle to meet their financial obligations on a regular basis. With a payday loan, they finally have some leverage. If they were offered the ability to pay off the loan early, they’d likely be able to save hundreds of dollars every year. 

Can You Get a Payday Loan Without a Credit Check? 

Yes, but it requires you to prove that you have reliable income. If you’re applying online, you’ll generally need to use your Social Security Number to verify your identity. If you’re requesting a loan through a storefront location, you’ll need to show identification. In both cases, you’ll need to document that you actually earn enough money to afford the loan. 

In addition, you’ll need to submit documentation proving that you have sufficient assets to repay the loan. 

While this process isn’t too difficult to navigate, it does require that you know exactly where to go and what to say. As a result, many individuals would rather not deal with the hassle involved in getting a payday loan. 

Is There Any Way To Avoid Payday Loans? 

Unfortunately, there aren’t any alternatives to payday loans. These products are often the only way to meet unexpected expenses without going into debt, but they also carry significant risks. 

It’s important to note that payday loans should never be used as a long-term solution. They’re designed to help you handle specific situations until you can catch up on your debts. Once you’ve paid back the loan, you’ll need to find another source of income to support yourself and your family. 

However, for now, payday loans are here to stay. Unfortunately, there are few viable alternatives available, making them an essential tool for consumers looking for a quick fix

Conclusion

Many Americans are in debt these days with a lot of paycheck after paycheck they have put themselves in extreme debts and they have not paid the debt for a while even paying their whole money is not gonna pay their debt leading them to take extreme steps like suicides or any other crimes like doing gambling.