Payday loans aren’t like the typical loans you’ll find at a bank. You won’t use a payday loan to pay for a car or a home. When emergency expenses pop up, they are a viable option for people who need money fast.
People who have never taken out a payday loan often have questions. They may be used to the stringent requirements of banks and other lenders, but not the ease of getting a needed payday loan.
We’re here to answer some of the most common questions associated with payday loans. It’s important if you need payday loan help that you understand everything about them before signing on the dotted line.
How Much Can I Get a Payday Loan For?
Standard loans can be for thousands of dollars or even more if you’re buying a home, but payday loans are usually for amounts between $100 and $1500 generally. They’re not designed to be paid back within years or even months.
You’re expected to pay for the loan on your next payday. They’re small amounts to cover emergency and other expenses that you can’t afford at the time. They’re not meant to be long term loans and only low amounts are given so they’re easier to pay off.
Why Are Payday Loan Interest Rates So High?
While standard loans have a low-interest rate and credit cards can reach 24 percent or higher, payday loans can be 200 percent or more. This could be scary for people needing the loan, but it’s a necessary practice.
Interest rates are based on an annual percentage rate. In standard loans, this is considered when creating monthly payments. If payday loans used these same rates, they wouldn’t make much of a profit because the loans are paid off within a few weeks.
By having high annual percentage rates for payday loans, they can still make a decent profit even though the loans are paid off quickly.
Is It Easy to Get Payday Loan Help?
If you have bad credit, you can still get a payday loan. While standard bank loans rely heavily on credit scores to determine risk, payday loans don’t. If you want a payday loan, you need to be at least 18-year-old and have proof of income, usually a few pay stubs, and a bank account with direct deposit capability.
Banks lend lots of money, so if you default on a $50,000 home loan, the bank must go through court proceedings, foreclosure and then they end up with the deed to a house they don’t want.
Payday loan amounts are significantly less, so the risk is decreased. If you default on a payday loan, they can still go after you through civil judgments. It could end up with a wage garnishment to take the money out of your paycheck automatically.
Is a Payday Loan Worth Getting?
If you’re in trouble and need a small amount of money fast, then you can consider payday loan help. Generally, you can have the money within 24-hours, but it’s a good idea to pay it off. If you miss the payment, the interest can rack up fast.
If you’re interested in learning more about payday loans, please explore our site.