Pay day loans or commonly preferred term is short term loan. It is called as loan for short term because, the time period for granting loan is less and even the amount. The loan is provided from a legitimate financial sector, in many cases, they are provided by banks for people who earn daily wages. In fact, these pay day loans are also known in many other names. According to Wikipedia, these pay day Loans are known as “pikavippihetiilmanluottotietoja Pay Day Advance, Salary Loan, Payroll Loan, small dollar loan, short term, or cash advance loan.” These loans are usually unsecured or are provided with minimum security hassles. Unlike, other kinds of loans, one does not need to bother about showing too many documents or about your credit scores.
These loans are provided to people regardless of borrower’s salary day. These loans can also be termed as a credit loan or they are similar to the credit card. The borrower takes the credit first, pays later. As a matter of fact, these loans are lend based on the borrower’s previous salary statements and employment details. However, the legislative rules vary from country to country and among provinces. The rate of interest for the loan or money lending is decided wholly by the bank or financial sector. In order to avoid, illegitimate rates of interest, many jurisdictions also get involved.
Generally, the annual percentage rate for any lender has to be maintained under a certain limit. This rule is applicable to the payday loans as well. For example, in the United States of America, the rate of interest for lending the pay day loans is regulated by the governing body known as Uniform Small Loans Law. They decide the annual percentage rate to 36-40%. Nevertheless, there are many different ways in which the annual percentage rate is calculated. Under the pay day loan, the financial sector could charge for $15 for credit of $100 on the pay day loan.
Process of Applying the Loan:
Under this process, the lender provides the short term loans to people based on the borrower’s next payday. This procedure involves some kind of verification of employment or monthly pay stubs or bank statements. However, some payday lenders do not verify on credit scores of the borrowers. In the recent times, the pay day loans are also available on online modes. The customers submit the filled loan application online. the funds get directly transferred by directly depositing in the borrower’s bank. The loan repayment and the finance charge is electronically withdrawn on the date of borrower’s next pay day.
Reasons for Borrowing:
Most of times, the pikavippihetiilmanluottotietoja pay day loan is taken by people who have troubles to cover the ordinary living expenses and are waiting for the next salary stub. Sometimes, these are even considered when there is an emergency for funds to the borrower. Unlike, regular loans these short term loans do not take much time to get approved and do not require hassle of documents verification. According to the studies conducted by the charitable trust in United States of America, most pay day loan customers are middle-aged women, or people with smaller jobs. In fact, some companies have found this strategy very helpful. They started providing loan to their employers within the company.