Most people have heard about payday loans. However, they may be somewhat unaware of how payday loans actually work. It’s important, especially if someone is thinking about one of these loans, to know some of the details about how this type of loan works.
The first thing to understand about a payday loan is that it is convenient to get. A person will need to show a steady form of income, whether it’s a job, disability payments, or even unemployment insurance payments. A person will have to have a bank account, and they will need to be over the age of 18 to legally apply for a payday loan.
No Credit Worries
Something that is different from a conventional loan is the need for a good credit score. Payday loan companies won’t even check a person’s credit when going through the loan process. Because a payday loan is using a person’s payday as repayment, the creditworthiness of a payday loan customer is not typically considered.
A person can go to a brick-and-mortar payday lender or they can typically apply for one of these loans online. In many instances, especially when applying online, the loan can be approved in a matter of a few minutes. Once the loan is approved, the borrower will agree to a specific repayment plan, typically a lump sum repayment from their next paycheck, or a short installment plan, depending on the size of the loan.
After that, the money is typically deposited in a person’s checking account and is available for use within a few hours to a day, depending on when the loan was submitted and approved. However, these times can vary from one lender to the next.
The ease of applying, the ease of approval, and the convenient nature of having your money in as little as a few hours are some of the reasons why a payday loan is such a popular option. If you’re in a situation where you need cash, you don’t have it on hand, you can’t wait until you get paid again, and you have no chance of getting a loan through a bank, a payday lender may be precisely what you need.