63% of Americans are living paycheck to paycheck. Let’s face it, we have all faced the time between paychecks where we felt pinched for cash.
Or maybe an unexpected bill or expense wallops your best-planned budget. If you have ever found yourself in this situation, you’ve probably thought if I can just make it to Friday when I get paid, everything will be okay.
Enter the existence of the payday loan. Have you ever wondered about applying for a payday loan? What are the payday loan requirements? How expensive is it to get to your paycheck a little sooner to avoid the crunch you’re feeling now?
Read on to learn more about payday loans and to apply for a loan if they’re right for you.
Table of Contents
What Is a Payday Loan?
A payday loan is a short-term loan, often for a smaller dollar amount. They get their name because they’re intended to get you through a cash crunch until your next payday when in theory, you can pay the loan back.
How Do Payday Loans Work?
The basic idea of a payday loan is that you apply for the loan either in person at a storefront location online. Once approved, you’re given either a check, cash (if in person), or the funds are deposited right into your account.
The loan is considered short-term so you’re expected to pay it back within a few weeks including fees and interest.
Laws and Regulations
The laws regarding payday loans vary from state to state. Some laws have limited restrictions, while in other states they are not allowed at all.
There are both federal and state restrictions in place, for the states that allow them. One federal law through the Truth in Lending Act requires that payday loan lenders provide upfront information about the dollar amount of the finance charge and the corresponding APR in writing.
This is important to know since often the fees and interest rates related to payday loans can be daunting.
When a Payday Loan Is a Good Idea
We have all faced situations where you need money for an unexpected bill or crisis. Sometimes, you just need access to cash. A payday loan can help solve a temporary cash crisis.
They are an okay option if you know your budget going forward will allow you to pay back the loan, fees, and interest on time. For information on getting a quality payday loan visit Bonsai Finance.
When a Payday Loan Could Be Risky
Some people go to a payday loan when they find themselves short on cash, but they don’t have a plan for how to pay the money back. Then when it’s time to pay it back, the fees and interest create a cash crunch again and they are no further ahead than when they got the original loan.
Payday loans can be risky if you are not careful to have a plan to repay them.
What You Need to Know Before Applying for a Payday Loan
Applying for a payday loan has helped many people get by an unexpected cash crisis. It gets them the funds they need until they can make it to payday.
Be sure to do your research and be prepared for the fees and interest rate that comes with the payday loan.
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