What is a Payday Loan?

Are you in financial trouble? Getting out of debt is a difficult and daunting task for most however, there is a light at the end of the tunnel. Applying for a payday loan is one way to help you get back on your financial feet.

What is a payday loan?

Payday loans, cash advances or cheque loans are short-term loans that you must pay on your next paycheque. These usually have three distinguishing characteristics:

1.    Approximately $500 or less

2.    You must pay them when you get your next pay cheque

3.    You must provide creditors access to your chequing account or write a cheque for the entire amount in advance that they can deposit when the loan is due.

Most lenders have their own parameters when offering clients this type of loan, but they are generally very flexible. Several creditors provide online payday loans because of its convenience and accessibility. Clients take this option because they do not have to spend extra time and money leaving their home or work to get a loan.

Despite common claims, creditors do not generally lend money irresponsibly; they must get a guarantee from a debtor that he or she will get a job or if their current work is enough to pay for the loan they apply for.

What are the benefits of getting one?

This financial service has several advantages that will enable you to recover from your current financial situation. By applying for a payday loan, you can get cash within a few days or 24 hours. This fast and easy access to cash provides you with the relief you need to overcome a difficult financial situation. With the money you get, pay for immediate utility bills, debt, credit cards or others.

You also avoid incurring a penalty with this type of loan because you can start paying on time again. Late payments affect your credit score negatively as it shows you lack the financing to keep up with your debts. This enables you to rebuild your score and earn the trust of other lenders.

With this loan, you do not have to dip into your savings when an emergency arises such as medical and hospital bills, car breakdowns, house renovations and other similar expenses.

Who can use this loan?

Anyone with a steady source of income and a chequing account can get a loan. However, debtors who do not have savings accounts or credit cards apply for this type of loan. Many creditors who provide this loan do not require a credit check, so people with no credit or who have credit problems often turn to this financial service.