There are several different types ofpayday loansthat you can apply for. Some allow you to have the amount directly paid to the agency that issues you the funds and others require you to make a payment in person. No matter which type you apply for, there is interest tacked on to it. More often than not it starts a vicious cycle of having to continually borrow money. You borrow $200.00 to pay your car insurance, cable bill and mobile phone but when you pay back the loan amount and interest you are short on your electric bill and rent. Every pay period you have to borrow again which means even more money paid out in interest.
An employee of mine got sucked in to doing a payday advance loan when his car broke down; instead of asking me to borrow money he went to a loan center and secured $300.00 using information about his night job as a bartender. The $300.00 he borrowed ended up costing him $390.00 to pay back. He went through this for the better part of four months; borrow and repay only to borrow again before he came to me asking for help. I handed him the money and told him to pay back the amount he owed. We worked out a repayment plan of $25.00 a week no interest of course and he was finally out of the cycle of constant debt.
Anticipated Tax Refund Loan: These are different from checks issued from tax refund preparers; these are loans that give you a percentage usually 84% of your anticipated loan refund but there are times when you will be offered less if the issuing agency thinks you will not get the complete or full anticipated amount. You will not get a tax refund, the check will go directly to the issuing agency. If you accept a payout amount lower than anticipated but receive the full amount on your prepared tax return you will get a percentage of that amount.
Payday Advance Loans: The amount you can borrow is based on the average amount of your last three months of net pay amount after deductions and taxes. If you make $200.00 per week you may be allowed to borrow up to half that amount, if you make $400.00 every two weeks most places will allow you to borrow $250.00 but each agency is different. The interest on the advance payday loan can be as little as 15% or as much as 35%; generally lower income areas have higher interest rates.
Payday Cash Advance: This is cash paid to you based on your income but it is not automatically deducted from your paycheck. Most agencies will call to verify your employment but will not divulge that you are applying for a cash advance loan. This is considered more discrete but it still has the same interest structure and could cause you to fall in to the same pattern of borrowing and repaying each pay period.
How do you apply for an advance payday loan? You have to have a current non-expired state issued photo identification, two pieces of mail in your name dated within the last 30 days, at least one utility in your name, pay stubs or direct deposit slips from the past three months and a phone number for your company to verify current employment. Each lender has a different critera for qualification; smaller local agencies usually inside check cashing and bill paying locations can give you an answer in minutes and have you out the door in less than a half hour from the time you start the process.
Online lenders will charge more of an interest rate than local lenders; they do offer you the option to have the money wired to you for an additional fee or to have it transferred to your bank account. If you have overdrafts or an overdrawn account the money deposited into the account will automatically go towards those fees even if the overdraft was not your fault. That could lead to not having funds available immediately, you also have to check with your bank about the actual availability of funds that are deposited or wired to your account. Some can have as much as a five day hold on them. If you are desperate for cash, having it wired by Western Union or Money Gram and paying an additional fee will be worth it.
One of the pitfalls of getting a loan from an online company is the interest rates that are charged. Western Sky is one of the typical lenders that offer a fast turn around on an application but charge incredibly high rates. If you needed to borrow $1,500.00 you would only be getting $1,000.00 because of the $500.00 loan fee. Your APR is 234.25%. Your monthly payments would be $198.19 for 24 months for a total amount paid back of $4,756.56. That amount does not include late payments or other fees that may be added to the borrowing amount depending on the state in which you reside. Companies like Western Sky Financial reduce the loan fee when you borrow a larger amount and while the interest rates drop, you are still going to be paying at least 70% in interest.
Payday loans and payday advances have become a necessity for some people. Even if you have the best intentions to only do it once, chances are you will get sucked in to the revolving door of borrowing on a regular basis. Some of the lending agencies will also offer you a credit card but you are going to want to read the fine print about the fees and interest charges that are assessed with purchase and amounts accrued each moth that there is a balance.
