A few basic questions regarding payday loans
What is a payday loan? It is a short-term, high-cost loan. You have to pay it on or before your next payday. Your income may come from employment or government benefits. Lenders in commercial establishment, pawnshops, credit unions, internet lenders can take payday loan form Red Payday. Everyone who makes payday loans, including online lenders, must have a license issued by the Department of Financial Institutions.
How safe are online lenders?
May be it is not. There are unregistered companies, which you cannot differentiate form the registered ones. The DFI does not license or control tribal lenders. They are not registered to do business. It is the reason why you should take payday loan from a recognized and trustworthy financial institution. Before you get a loan from an online payday lender, make sure they have a DFI license. Most do not.
How long can I get a payday loan?
A payday loan does not require any credit score. Maximum return date could be as long as 45 days. There is no minimum term. The term for most payday loans is 14 to 16 days.
What is the difference between payday loans and other loans?
Payday loans are not approved based on credit check like a regular loan. Payday loans do not show up on a credit report. They cannot improve your credit if you repay the loan on time. Payday loans can only hurt your credit score if you fall behind on payments.
How does a payday loan work?
You write a post-dated personal cheque made out to the payday loan lender or you authorize the lender to withdraw money directly from your bank account on the date of the cheque or authorization. Usually this is on your next payday. You can pay back the payday loan via cash, or drafting a post-dated cheque in the name of the lender. If you authorized the lender to withdraw the money from your account, the lender will do so on the due date.
Should I take out a payday loan or not
You should look for other options. Payday loans are very expensive. They are difficult to afford on a tight budget. You can be stuck in a cycle of debt where you use one payday loan to pay off another. How much is the most you can borrow with a payday loan? You cannot borrow more than $ 700 or 30% of your gross monthly income, whichever is less, at any one time.