Payday Loans vs Secured Loans

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February 20th, 2010 by admin

The economic recession is causing financial problems for many people around the country and around the world. Perhaps the biggest problem is that people are having a hard time dealing with everyday expenses and mounting debt. Many people turn to loans to help them get by. Two types of loans that are quite popular are payday loans and secured loans. Payday loans are small cash advances meant to be paid within a short time. Secured loans, on the other hand, are relatively large loans that are secured against a collateral until paid off over a long-term period. Read on to learn about the pros and cons of secured loans and payday loans.

Pros and cons of payday loans

Pros:

- Require little to no credit check, meaning that these are easy loans to procure from lenders.

- The short-term nature of payday loans allow for quick cash to cover everyday expenses, emergency expenses, and any other relatively small expenses.

- Payday loans are a good type of loan to get if you have a regular source of income but are struggling to keep up with your expenses.

Cons:

- These loans are rather small, so they normally cannot be used for large expenses, such as downpayment on cars or homes.

- Payday loans have relatively high interest rates and penalty fees, which means that failure to repay a payday loan can quickly mount debt.

- You should only consider getting payday loans as a last resort, because payday loans often lead to a vicious loaning cycle that is hard to get out of – especially if you are living by the paycheck.

Pros and cons of secured loans

Pros:

- Secured loans are built for long-term use, which is why they are secured against a piece of collateral, such as your home. This makes secured loans (such as mortgages) great for large purchases, like when you are purchasing a home on mortgage.

- Because of their long-term nature, secured loans normally have lower rates of interest.

Cons:

- Although secured loans have relatively low rates of interest, when you calculate the total interest paid over the long-term period, it often amounts to quite a lot.

- Perhaps the biggest downside of getting secured loans is that you can lose the secured property, for example your home in the case of a mortgage, if you fail to make regular payments to your lender.

Related questions:

1. What is the difference between a payday loan and a secured loan?
2. What are the advantages and disadvantages of payday loans?
3. What are the advantages and disadvantages of secured loans?

Understanding the Payday Loan Reform Act of 2009

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February 20th, 2010 by admin

Because of the economic recession, many people are looking toward loans and debt management plans to help get through financial difficulties. One popular type of loan is the payday loan. Payday loans are small, short-term cash advances that are meant to help the borrower when he or she is in need of money but payday is still far off. The main idea behind payday loans is that the lender lends a small amount to the borrower and the borrower is obliged to pay off the loan upon the arrival of the next paycheck or source of income. There have been many controversies surrounding payday loans, including overcharging, extremely high interest rates, and fraudulent lenders. For this reason, there are now numerous laws enforced to protect both lenders and borrowers in the payday loan market. One bill that is currently being reviewed for signing is the Payday Loan Reform Act of 2009. Read on to learn more about this act and how it may affect you as a consumer in the payday loan industry.

What is this Act all about?

The Payday Loan Reform Act of 2009 was posted by Representative Luis Gutierrez and numerous other sponsors, including the Chairman of United States Financial Institutions. In the most basic terms, the Payday Loan Reform Act of 2009 makes payday loans more uniform and secure, avoiding usury, overcharging, and borrower abuse. The main idea of the Act is to break the often cyclical nature of payday loans. Through this Act, the APR interest rate is fixed at 15 cents for every dollar loaned or 48%. The Act also means that there will be a fixed repayment plan of 90 days, wherein the borrower is legally freed of any fees imposed by the lender.

What is the possible impact of this Act to the payday loan industry?

Overall, there have been mixed feelings about this Act. Although it is ultimately meant to increase the security and improve the structure of payday loans, some consumers and market specialists are against this bill. Some expect that the bill will have a negative impact on borrowers. One of the main reasons for these mixed opinions is because the bill does not propose any fixed, lower rates at the state level. Another concern of some analysts is that this Act does little to nothing to protect lenders. Because of the proposed reforms in this bill, it has the potential to put payday loan lenders out of business–a situation that would be detrimental to many consumer’s financial state.

Related questions:

1. What is the Payday Loan Reform Act of 2009?
2. What are the advantages and disadvantages of the Payday Loan Reform Act of 2009?
3. How will the Payday Loan Reform Act of 2009 affect the payday loan industry?

FAQs on Payday Loans

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February 20th, 2010 by admin

Even though the economy seems like it is improving on a slow, upward trend back to stability, the economic recession is still taking its toll on people. Job loss is still prevalent, pay cuts are still in effect, and the general difficulty of finding a good job causes major financial problems in both day-to-day and long-term living. As such, many people are turning to debt management programs and loans to help them get back into a better financial standing. If you are having financial difficulties and you are in need of quick cash, one great option for you is to get a payday loan. Payday loans are short-term cash advances of small amounts that are meant to last until the borrower’s next paycheck arrives. This article will cover some of the frequently asked questions (FAQs) on payday loans.

Common FAQs on payday loans

1. Do payday loan laws differ from state to state?

Yes. This is why it is important to look up the local laws on payday loans and lending services in general to ensure that you know your rights.

2. How can you qualify for a payday loan?

Requirements for payday loan qualification may differ from one lender to the next. In general, however, borrower’s are expected to have a regular source of income, be a US citizen of legal age, and have a proof of residency.

3. Can you get a payday loan with bad credit?

Many of the lenders offering payday loans do not check your credit record, score, and history. What is most important is that the borrower has a regular source of income to prove his or her ability to repay the loan in the future.

4. How long do you have to wait before receiving the funds on a payday loan?

With Internet payday loan services now widely available, it normally doesn’t take very long before you receive your payday loan money. As soon as a lender looks over and approves your application, your money can be wired directly to the savings account or checking account that you specify in your application.

Tips when applying for payday loans

- When applying for payday loans, make sure that you know all of the basics to ensure that you get a good deal that will give you the best chances of repayment and the best chances of getting back on your feet, financially.

- Remember to do your own calculations on how much your total repayment fees will cost, including the amount paid on interest, penalty fees, etc.

- Make sure that you make repayments on time and in full to avoid the build up of debt.

Related questions:

1. What are payday loans?
2. What are some of the commonly asked questions about payday loans?
3. Are there any tips I should know before applying for a payday loan?

Payday Loans vs Other Loan and Credit Products

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February 17th, 2010 by finance-writer

During these times of economic hardship, many people are experiencing financial instability and employment issues. Be it job loss, income cuts, or mounting debt, one thing is very clear: money is difficult to come by these days. Fortunately, there are numerous ways to work around financial problems like these. Some of the more traditional financial products that can help in times of a financial pinch include personal loans and credit cards. Aside from these, however, payday loans are becoming an increasingly popular means of getting fast cash in times of need. Payday loans are also commonly referred to as paycheck advances or payday advances, and these types of loans are defined as short-term loans of small amounts to cover expenses until the borrower’s next payday. This article will go over some of the advantages and disadvantages of payday loans over other financial products, such as credit cards and personal loans.

Payday loans vs having a credit card

Credit cards are financial products that can be a great help or a great burden. When you are short on cash or you do not have cash in your wallet, then plastic will probably get you through the day. Also there are numerous payment plans, such as installment basis payments, that can be used on your credit card to help pay for large expenses like medical bills or big purchases. The downside to credit cards, however, is that you need to watch your expenses. It can be easy to go overboard charging expenses to your credit card only to find out that at the end of the month you’ve charged more than you can pay for. This is where payday loans have a slight advantage over credit cards. Payday loans are small, one-time, short-term loans that do not require a line of credit. Also, unlike credit cards, payday loans will not require you to undergo tough evaluations from credit companies that will check your credit history, credit report, and credit score. Finally, payday loans do not require monthly fees, like the fees that credit card companies charge for their services.

Payday loans vs. personal loans

In comparison to payday loans, personal loans are often stretched out over longer terms. Personal loans normally refer to relatively large lump sums of money. Because of this, personal loans are often better for large purchases, such as for downpayment on homes or cars, payments for large medical bills, or as capital for starting a business. Lenders offering personal loans normally conduct a financial evaluation of the borrower’s credit report, history, and score to ensure that the borrower will be able to repay the loan. The main advantage of payday loans over personal loans is that payday loans are often easier to get and they do not require periodic payments over long periods of time.

Related questions:

1. What are payday loans?
2. What are the advantages of payday loans over personal loans?
3. What are the advantages of payday loans over credit cards?

Required Documents for Payday Loan Application

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February 17th, 2010 by finance-writer

With all of the financial problems being caused by the economic recession, people are looking for new ways to deal with debt, manage their finances, and get by with day-to-day life. Many people live their life by the paycheck, just getting by on their monthly income, but this can be very dangerous. Oftentimes, it is possible that, when living by the paycheck, you can encounter unforeseen expenses, emergency expenses, or you may simply overspend. If you find yourself having financial troubles and you need a little extra money to deal with expenses until your next paycheck, then you may want to apply for a payday loan. Payday loans are extremely useful if you are careful about how you use them and you make sure that you are able to pay them off in full and on time. This article will cover some of the basics on the documents required to apply for a payday loan.

Proof of residency

One of the basic requirements for a payday loan is a proof of residency. These documents are required in order to ensure that you have a place of residency where they can send your bills. Proof or residency includes such documents as utility bills, phone bills, or other similar documents with your name and billing address.

Proof of stable income

The second type of document required to get a payday loan is a proof of income. Lenders ask for these documents to ensure that you have the means to repay the loan in the future. Also, when borrowing on a payday loan plan, the amount loaned to you is often based on the amount of income that you make. The most common type of proof of income is a payslip from a registered and legit employer.

Perhaps the biggest advantage of payday loans is the fact that most companies that offer payday loans will not require an extensive evaluation of your credit history and credit standing. Applying for credit cards and personal loans normally requires you to undergo such an evaluation to ensure that you are financially capable of repaying your loan in the future. Overall, however, payday loans are rather easy to apply for. Just make sure that when you apply for a payday loan, you only go for lenders who advertise no fax payday loans, which means that you can get your payday loan faster and with less hassle.

Related questions:

1. What are the basic requirements to take out a payday loan?
2. What documents can serve as proof of residence for payday loan lenders?
3. What kinds of documents can be accepted as proof of income by payday loan lenders?

Top 3 US Government Laws Payday Loan Borrowers Should Know

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February 17th, 2010 by admin

Payday loans offer a great way to take care of expenses when you are low on cash and your next payday is still days away. Basically, a payday loan is a type of financial product offered by lenders, in which a small loan is lent to the borrower for a short term period. Normally, the term is decided on when the borrower’s next payday is. While consumers can benefit greatly from payday loans, there are also a lot of dangers that are associated with this type of loan. For example, because of the nature of the loan, borrowers can get carried away, not realizing that their debt is building up and they are entirely dependent on payday loans. Another danger is that lenders can take advantage of borrowers by overcharging or loan sharking. To combat this, there are a number of US laws governing payday loans to protect both consumers and lenders. Read on to learn more about these laws.

Top 3 US government laws on payday loans

Typically, laws on payday loans differ from state to state, with some laws being more strict with numerous, specific laws and other states having little to no legislation on payday loans. Perhaps the most important payday loan law to recognize is the state limit for payday loan fees. These laws prevent lenders from overcharging consumers. Another important law is that, in some states, payday loan lenders are required to follow guidelines as to what information they must disclose to the borrower. In these states, lenders are required to provide a written agreement that is understandable and clear, with fees in boldface print. It is also important to keep up with some of the payday loan laws that are currently seeking Congressional approval, such as the Payday Loan Reform Act of 2009 and the C.L.E.A.R. Act, both of which seek to nail the APR rate on payday loans at 780 percent.

Importance of knowing basic payday loan laws

It is extremely important to know the laws on payday loans, otherwise, you can easily fall victim to predatory pricing, loan sharking, and scam lenders. Falling victim to unlawful payday loan plans and lenders can lead to further financial turmoil, reducing your chances of paying off your loan in full, and increasing your debt. Also, knowing payday loan laws will ensure that you do not violate any law yourself. The main idea is that payday loan laws protect both you as a consumer and the lender, so it is always best to know these laws and how they relate to you as a borrower.

Related questions:

1. What are the top payday loan laws?
2. How do payday loan laws help protect me as a consumer?
3. Do payday loan laws also protect lenders?

Top 3 Reasons Why No Credit Check Payday Loans Are for You

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February 3rd, 2010 by admin

One of the popular trends in financial products today is the payday loan. Payday loans often have the advantages of having no credit history assessment, quick turnover of loaned money, and the ability to use payday loans for paying off other bills and debts without having a huge impact on your credit report. This article will cover three reasons why you may want to consider getting a no credit check payday loan the next time that you are in need of money.

You have a bad credit history

First, payday loans are a great choice for you if you have a bad credit history. Most of the time, when you want to loan money, lenders will have rigorous assessments of your credit history and they may deny your loan application if you do not meet their criteria. With payday loans, however, lenders are often much more lenient, approving loans on the fly without a strict evaluation of your financial history, credit reports, and credit scores.

You just filed for bankruptcy

Another situation in which payday loans would be a good choice for you is if you have just filed for bankruptcy. When you file for bankruptcy, you often start with a clean slate, meaning that you will have to work your way to getting a better credit score and to clear your credit report of negative remarks. Payday loans can be a source of great help when you have filed for bankruptcy and you need money to pay bills, buy groceries, or pay off any other expenses that you may have.

You are in need of quick cash

Finally, payday loans can offer fast and easy relief when you are in need of quick cash. For example, you may be stuck in between paydays without any cash, when an unexpected expense or an expense you cannot pay off arises. Payday loans can be a great help to deal with these expenses without having to go through long financial evaluations, disapproval from lenders, or any other financial setbacks that may keep you from getting quick cash. Whatever you do, just make sure that you will be able to pay off your payday loans before your debt builds up and you get into an even worse financial situation.

Related questions:

1. What are the risks of taking out no credit check payday loans?
2. Are payday loans good for rebuilding a credit record?
3. What’s the standard interest charged for no credit check payday loans?

Ensuring Personal Safety in Payday Loan Applications

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January 25th, 2010 by admin

Payday loan applications are easily approved nowadays. It seems that the lenders have come to terms with the fact that most people who would need a payday loan have terrible credit history. To reject people with bad credit means having to reject most of the loan applicants. So, who will be the clients left for cash advance lenders? Lenders did create a means for them to insure themselves from huge losses: huge interest rates. Borrowers, however, are not that concerned about the interest rates when they badly need the money right now. However, there are far more serious concerns to deal with than payday loan fees.

Making sure that the payday loan company is legit

Do your research on the payday loan company. If possible, go for a company somebody you know has borrowed from already. This way, you can be sure you are dealing with a legitimate lender. It is better to go for reputable companies rather than secretive payday loan companies that hide under the thick covers of the Internet. If a deal seems too good to be true, you have to rethink your application, especially if you are asked to provide personal details.

Reading the payday loan contract carefully

You also have to read the payday loan contract carefully if you do not want to be charged some unexpected expenses. Read the fine print. You may be getting yourself into big trouble even if the whole deal is very much legal. Even if you are in a state of financial emergency, learn to be calm enough to peruse the details of your payday loan contract. While it is tempting to get things over with by signing every line you can see, it is still advisable and wise to know what you are getting yourself into.

Payday loans may be your only sources of cash during hard times. However, this does not mean that you should allow lenders to con you into paying a lot of money or into making agreements with criminals. You should always be careful about transactions that involve money. The first part of the deal may have money coming from the other party to your side but the second part of the deal may just be deadlier. You could end up doing so much more than paying off loans with huge interest rates. You could end up robbed of more if you are dealing with an illegal lender.

Related Questions:

1. What deals should you guard yourself against when applying for a payday loan?
2. How do you avoid being conned when applying for a payday loan?
3. What is the worst case scenario in getting a cash advance?

Guide to No Faxing Payday Loans

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January 22nd, 2010 by admin

A faxless payday loan is a fuss-free cash advance. The term faxless here refers to the fact that you do not have to submit papers that show just how financially responsible you are. These lenders, however, will charge you with very high interest rates. These sky-high rates serve as insurance for the risk the lender is taking by lending you money. Do note that payday loans and cash advances in general have very high interest rates.

Faxless payday loans process

The whole no faxing payday loans process can be done online. This means that there is no need to be part of a long queue. You do not even have to reveal your situation to other people because you are applying in the privacy of your home. Some lenders have such a very easy to use online application form. The online application can last as short as five minutes, depending on your own typing speed and train of thought. Then, you wait for one business day to have your application processed. If approved, your loaned money will be deposited directly to your bank account.

Others considerations when applying for payday cash advance

When you apply for no faxing payday loans, you do have to think about how legitimate the company you are borrowing from is. Although you are the one who is going to borrow the money, you should always check the reputation of the lender. You could be borrowing from a syndicate that could use guns and threats to get you to pay back. Also, consider your own ability to pay back. Remember that a payday cash advance has a huge interest rate attached to it. APR can be as much as 390%. It is shocking when you think of it this way. Most of the times, you are told that you only have to pay $15 for a $100 loan. That is actually a lot of money.

No faxing payday loans are convenient and easy. You do not have to prepare documentation that you need to send to the lender. Even if your credit score is terrible, you could still get approved. However, these all sound too good to be true. Of course, there is a catch. You have to pay a lot of money to return the money you have loaned. The sky-high interest rate, according to the lenders, is implemented to make fast processing possible. It also maintains a business that is also taking a lot of risks.

Related Questions:

1. What is the best thing about no faxing payday loans?
2. Is the faxless payday loans process similar to the longer version of cash advance applications?
3. What are the biggest concerns about faxless payday loans?

Calculating the REAL Cost of Payday Loans

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January 20th, 2010 by admin

Are you keen on applying for a payday loan? Before you do that, however, you should first be aware about how payday loans will cost you. The sad truth is that though the borrowing part can be a tad easy, you will be paying more than what you will borrow and not just by a little more. You may be too much in a hurry to get the cash that you are willing to sign any agreement. So, better check yourself before you decide to apply for payday loans.

Taking note of APR, loan amount, and other payday loan fees

Make sure that you are clear about what the annual percentage rate (APR) is based on the loan amount and other, hopefully not hidden, payday loan fees. Payday loans are short-term loans that require big interest rates to be paid. For example, a hundred dollar loan have to be paid in full plus a fee of $15 according to the rule book of some lenders. If you cannot pay within the period stipulated, you may even have to pay another $15. Imagine if you cannot pay for a year. You will see a staggering APR of 390%. So, you have to calculate the possible amount you have to pay back if you have a payday loan. You may be in such a rush to get the money but you could still consider other options, depending on your situation. This could be an extension request with creditors or a loan from a lender with smaller interest, such as your credit union.

Payday advance loans pricing structure

The payday advance loans pricing structure is constantly criticized because of the huge APR. The borrower also needs to pay after quite a short period of time, such as a week. Lenders, however, defend their practice. They say that the money they charge is the money used for fast transactions.

So, do you think a payday loan is for you despite the high APR? Well, it depends. Payday loans are aimed at people who do not manage to reach their next salary without getting into some financial emergency. Sometimes, in order for them to survive, they will have to brave the high interest rates. They just do not have a choice. So, if you want to be able to choose, you should always budget properly and set aside some money for emergencies.

Related Questions:

1. What do you think of the pricing structure of payday loans?
2. Would you be able to pay your loans if you constantly have to depend on payday cash advances?
3. What do you think are good alternatives to payday loans?Are you keen on applying for a payday loan?