What is a payday loans direct lender?

A payday loans direct lender"}” data-sheets-userformat=”{"2":512,"12":0}”>payday loans direct lender is a form of short-term borrowing in which the lender offers an income-related, high-interest loan. Usually the loan amount is a part of your next paycheck, they are also known as cash advance loans or check advance loans.

As an unsecured personal loan, the interest rates from payday lenders are usually very high. Many consider them a form of predatory lending because they do not take into account the borrower’s repayment ability and do not always specify additional fees upfront. In addition, there are the mostly high interest rates that let consumers fall into a debt trap payday loans direct lender

This is how payday loans work

Payday loan providers are often small loan dealers who can operate from physical premises or online. Borrowers are required to provide evidence of their income by submitting new pay slips, but lenders typically do not perform a full credit or affordability check.

The interest rates on payday loans can vary widely and can be up to 780% in the annual interest rate. Although most US states have usury laws that limit the interest burden to 5% to 30%, payday loans come under an exception. That means they can charge much higher interest rates.

Thought as short term loans, payday loans typically have terms of more than 30 days and are used by individuals who need instant money to meet short term liabilities. Loan amounts are typically anywhere from $ 100 to $ 1000, and it is common for loan fees to be around $ 15 per $ 100 of loan.

For example, a borrower takes out a $ 300 payday loan over 14 days to pay for auto repairs. Given an average fee of $ 15 per $ 100, if the loan was paid on time, the repayment would be $ 345. However, if the borrower fails to repay it in a timely manner, a rollover fee of $ 45 will be charged, meaning they now owe $ 390, plus any late fees that the lender may charge.

Benefits of Payday Loans

The benefits of payday loans are limited but include:

Collect cash immediately

When a person needs cash right away to pay an unexpected bill or pay for car repairs, payday loans can give them that money. Short term personal loans are a better option, but they may not always be available for those with bad credit.

Disadvantages of Payday Loans

The disadvantages of payday loans are:

High interest and fees

Payday loan providers are not always transparent about their interest rates or fees. Including their standard fees and the fees they will charge if you fail to repay the loan within the time agreed when the loan was taken out.

Can trap consumers in debt

Taking out a payday loan can be the beginning of consumers who find themselves in a debt trap. A borrower takes out a payday loan because they need instant money, but then that money usually has to be paid back within 30 days in order for the payment to be deducted from the next paycheck, which leaves them running out for the following month and likely needing another payday loan .

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