Payday loans are there to help a person make ends meet. The reason is simple. Many people simply have too much of the month left, or the week, when the paycheck is gone. For these people payday loans are a way of borrowing and stretching the budget a bit.
With a payday loan a consumer will form a relationship with a payday loan company. This will involve filling out an application form and providing bank account information. Payday loans are paid back to the lender using a check, which is post dated, so the checking account information is needed. It is also confidential.
Embarrassment is common among people have run short of money and are considering payday loans as a solution to the problem. They should realize however that here is no need for embarrassment. Almost everyone has run short of money at one time or another and payday loans are a common way of stretching the time between paychecks. Many people like the fact that they can borrow a small amount of money quickly, without having to go through the normal process time at a bank. Other people who use payday loans simply don’t have very good credit and need to use them to get by.
A customer must next determine the amount needed. Payday loans are sometimes for as little as fifty dollars, and sometimes for as much as five hundred dollars. The amount varies according to the policies of the loan provider and the customer’s needs. Some companies will start a customer off with a small amount of cash, and raise the amount that can be borrowed as they get to know the person better and find they have a good record of repaying their loans. After a person has had several loans for smaller amounts and repaid them on time, bigger loans will become available. In other words, you’ll start out small, with fifty or one hundred but eventually be able to move on up to the larger loans.
Assuming that the company you visit accepts you as a customer and will make an initial loan of one hundred dollars, your obligation is to write them a check to be deposited on a determined date in the future, more than likely your next payday. The amount of the check you write will cover the one hundred dollars and a fee charged by the lender. The fees vary from jurisdiction to jurisdiction, and you’ll have to check with your lender to determine the amount. Then take that check to the bank and cash it or deposit it and you have your loan to get you by until your next pay period arrives.
Since payday loans have fees larger than borrowing from a bank, a borrower will have to take those into consideration when making out a budget for the next pay period. But, careful use of a payday loan can help a person squeeze by until the next paycheck arrives.