For people that are unaware a payday loan is exactly what it sounds like. It is a loan that you borrow up until payday. This is a small personal loan. You agree to the terms that the money that has to be paid back in full when you get paid.
No Long Term Installments
There are people that have traditionally acquired a loan and payed it back over a course of a number of months. These are installment loans. The amount is typically greater than anyone can pay back in the course of a pay period. This loan is paid back in smaller amounts with a lower interest rate over a longer time frame. With the payday loan people are not subjected to a longer time for making payments. What they are doing instead is paying the loan back in full in the course of about two weeks in most cases. There are some people that get paid once a month, but most people are going to get paid weekly or bi-weekly. People that are borrowing money won’t work specifically with the payday loan store to designate a time frame where this money can be paid back. Payday loan money is going to have a significant amount of interest attached to the money that is borrowed.
Why People Seek Payday Loans
People that are aware that these types of loans are going to have significantly higher interest rates may wonder why some people consider going this route. The answers to this is simple: many working class people have bad credit. Having bad credit is not going to be a hindrance to those that are trying to obtain a payday loan. This is the reason why people we will still acquire these type of loans even if the interest rate is substantially higher. They know that the process of getting the money is going to be easier regardless of their situation.
People that are part of the working class community that sign up for payday loans (check out Zebra Loans) will need access to a checking account. They also need a valid driver’s license and a job where they have sufficient income to bring back the amount that is being borrow with interest added. Everyone is not going to qualify for the same amount because everyone does not make the same. There are going to be limitations on what a person can borrow because their check has to cover the total amount of the loan with the interest added.
What people are essentially doing is borrowing a portion of their check in advance. What they a promising to do is pay back the amount in full when they get paid. For a number of people the alternative is missing payments on other things if they do not have the money. Bad credit history makes it hard for many people to find alternatives to this.