Payday loans can be defined in two ways. Payday loans are considered as the same term for a cash advance or paycheck advance. The second definition so that interest payday loans, small short term loan (usually up to $ 1,500) that do not require credit checks and aims to bridge the fiscal deficit, which takes place somewhere between the day of the previous month and the current month salary. Payday loans are usually given in cash. In safe mode, postdated checks issued by the borrower to the lender. A control, including a figure which is the total initial capital and interest, and a bear the date that coincides with the next payday of the borrower, the check is cashed by the lender or with a series of traditional or electronic bank borrowers.
Payday lenders typically operate out of a small store or a franchise, recently seen as one of the leading financial services provider that offers payday loans with different terms. While some of the leading financial institutions that offer payday loans direct deposit form, others keep it simple to follow the standard rules of payday loans. However, direct deposits and checks reduce the burden intended only for those who receive their monthly payments electronically. But the United States, where most states have usury laws themselves, to force lenders payday loan interest rates stay within certain limits. Thus, lenders payday loans through banks involved in different situations. Payday loans are subprime loans.
Although the numbers seem low interest credit card interest rate is high, increase controversy bigger than a credit card. While some argue that payday loans are exclusively for young people, low income people and those who do not understand the time value of money, others evaluate payday loan lenders such as loan sharks, high interest rates (250% or more when annualized ) be the reason. Although payday lenders found interest under any applicable credit card fees, it has been proven that every payday loans $ 100 to $ 15 is equivalent to 391% of the annual rate if a check issued against 100 USD bounces back, a fine of 1251% of rate the annual normal credit card.
Therefore, payday loans, or loans with extremely high interest rates, it is always better to avoid, especially for someone who is aware of the time value of money. Even if the situation requires taking payday loans under some care, emergency should be taken to ensure that this does not become a habit. It is always best to consider other options before opting for payday loans, another reason to work effectively doubling both the initial payment.