Payday Loans – How They Differ from Traditional Loans

Most people, at one time or another, will find themselves in a tight spot when they’re trying to make ends meet, and for some, payday loans can be a quick, easy solution to their situation. However, it’s important to note that the interest rates are significantly higher. With that in mind, it’s crucial that the borrower repay the money on the date agreed upon.

What About My Privacy? Is a Payday Cash Loan Safe to Use?

Information given to representatives at legitimate payday loan institutions or commercial bank loan providers should be kept private. With identity theft a huge concern for most, many worry about giving out any identifying information. However, a loan of this nature is no different than any other bank loan whereas the information a customer gives is kept private and secure when they get started with lenders such as Whether it’s banking information, license numbers, or telephone numbers, a customer’s identification should be kept completely private when requesting at any loan institute whether it’s a credit union, commercial bank or any other financial center.

Payday Loans – Are They Considered Long-term Loans?

Payday loans may differ from traditional personal loans. They are considered to be a short-term loan, so customers can expect a payback date that coincides with an upcoming paycheck. At a traditional banking institute, a personal loan may be given with a longer amount of time applied to the payback date. As far as flexibility, a payday loan will require the customer to repay any money owed on a predetermined day. The reason the payback time is short with this type of lender in comparison to standard bank loans is because the loan is a smaller amount that is meant to be used in-between pay schedules.

How Convenient Is a Loan That Is Based on a Person’s Next Payday?

Payday lenders tend to keep hours that make it easier for the customer to reach them outside of regular business hours. However, most commercial banking institutions offer online access to their customers which they sign up for and view their account 24 hours a day, 7 days a week. As with commercial banks, many payday lending institutions also try to accommodate the customer by offering online access to applications and payment details. This allows an individual the convenience of requesting a loan without having to leave their home or work desk. Online access ensures that customers can view account information whenever they need to, anytime day or night.

How Does a Loan from a Payday Lender Work Differently Than Traditional Loans?

A customer writes a personal check that will be payable to the loan provider for the total amount the individual desires to borrow, plus the cost of any fees they will have to cover for borrowing the money. The lender gives the customer the money they need, less the fees that were added in the check amount the customer wrote. The payday institute will hold onto the check until the date the loan is due back. This day is typically on the date of the customer’s next paycheck. The advanced amount is set to be debited the following payday. If the borrower cannot pay the amount back on the set date, the lender may charge the customer additional fees on the loan if it is extended or rolled over to a new date.

Payday loans that are based on an individual’s pay period are considered the same as any other credit loan, so the lender will be required to disclose the charges for the advance to the borrower before they sign on the dotted line. Payday loan providers must give customers the loan charge and the APR, the annual percentage rate, in writing prior to the finalization of the loan. When it comes to APR on a payday advance, the rate of interest and credit along with the amount borrowed and the term of the loan are all considered.