Payday Loans - The Basics

Although defined broadly, payday loans are basically small monetary loans that individuals typically apply for and attain when they are in immediate need of money. Typically, payday loans constitute a short term loan (with a time period of about two weeks) for a relatively small amount of money-generally a few hundred dollars. In order to obtain a payday loan, people will typically write a check covering the amount they borrow as well as fees. The borrower will then leave this check with the loan company, and the lender will cash the check on the repayment date.

Payday Loan Repayment

Typically, a payday loan lender will provide the borrower with clear information regarding when repayment is due and what form the repayment will take. In the event that the borrower cannot repay the loan, she or he will often be able to "roll over" the payment such that charges continue accumulating.

Payday Loans - Costs

Typically, payday loans cost a lot of money. Specifically, the borrower will generally wind up paying an APR which could total several hundred percent of the loan amount. For example, you might be charged a $20 fee in order to borrow $100 for a two week period. The Consumer Federation of America has provided the public with clear calculations regarding APR rates, and they indicate that people pay about 426% APR on payday loans. However, it is not unheard of for an individual to pay an APR that exceeds 1000%.

Payday Loans - The Disadvantages

The primary disadvantage resulting from the use of payday loans is the costs involved. Ultimately, these high fees make it relatively difficult for people experiencing financial difficulties to solve their economic issues. Thus while using a payday loan once or twice in your life may provide a quick fix for a temporary problem, regular use of payday loans can set a person up for financial hardship.

Yet another disadvantage that can result from the use of payday loans are the financial challenges that can result if your repayment check bounces. If your check bounces, this fact can be reflected in your ChexSystems file and subsequently entail overdraft fees from your bank. If this happens, retailers and banks might not be willing to do business with you. Additionally, the lender can have your account transferred to collections or sue you. Either of these acts can negatively impact your credit.

Conclusion

If you have given any consideration to obtaining a payday loan, reviewing the information found above can provide you with a basic understanding of how they work as well as the advantages and disadvantages associated with them. Upon reviewing the information found above, you can determine whether utilizing a payday loan would be appropriate for you.

Disclaimer
Short-term loans are emergency credit products of relatively small amounts designed for short-term financial issues only and can become an expensive product if used for long-term purposes.

The owner and operator of Nemocash.com is not a lender and is not involved into making credit decisions associated with lending or making loan offers. Instead, the website is designedonly for amatching service, which enables the users contact with the lenders and third parties. The website does not charge any fees for its service, nor does it oblige any user to initiate contact with any of the lenders or third parties or accept any loan product or service offered by the lenders. All the data concerning short-term loan products and the industry is presented on the website for information purposes only. Nemocash.com does not endorse any particular lender, nor does it represent or is responsible for the actions or inactions of the lenders. Nemocash.com does not collect, store or has access to the information regarding the fees and charges associated with the contacting lenders and/or any loan products. Short-term loans are not available in all the states. Not all the lenders in the network can provide the loans up to $1,000. Nemocash.com cannot guarantee that the user of the website will be approved by any lender or for any loan product, will be matched with a lender, or if matched, will receive a short-term loan offer on the terms requested in the online form. The lenders may need to perform credit check via one or more credit bureaus, including but not limited to major credit bureaus in order to determine credit reliability and the scopes of credit products to offer. The lenders in the network may need to perform additional verifications, including but not limited to social security number, driver license number, national ID or other identification documents. The terms and scopes of loan products vary from lender to lender and can depend on numerous factors, including but not limited to the state of residence and credit standing of the applicant, as well as the terms determined by each lender individually.

APR Representative
APR (Annual Percentage Rate) is the loan rate calculated for the annual term. Since Nemocash.com is not a lender and has no information regarding the terms and other details of short-term loan products offered by lenders individually, Nemocash.com cannot provide the exact APR charged for any loan product offered by the lenders. The APRs greatly vary from lender to lender, state to state and depend on numerous factors, including but not limited to the credit standing of an applicant. Additional charges associated with the loan offer, including but not limited to origination fees, late payment, non-payment charges and penalties, as well as non-financial actions, such as late payment reporting and debt collection actions, may be applied by the lenders. These financial and non-financial actions have nothing to do with Nemocash.com, and Nemocash.com has no information regaining whatsoever actions may be taken by the lenders. All the financial and non-financial charges and actions are to be disclosed in any particular loan agreement in a clear and transparent manner. The APR is calculated as the annual charge and is not a financial charge for a short-term product.

Late Payment Implications
It is highly recommended to contact the lender if late payment is expected or considered possible. In this case, late payment fees and charges may be implied. Federal and state regulations are determined for the cases of late payment and may vary from case to case. All the details concerning the procedures and costs associated with late payment are disclosed in loan agreement and should be reviewed prior to signing any related document.

Non-payment Implications
Financial and non-financial penalties may be implied in cases of non-payment or missed payment. Fees and other financial charges for late payment are to be disclosed in loan agreement. Additional actions related to non-payment, such as renewals,may be implied upon given consent. The terms of renewal are to be disclosed in each loan agreement individually. Additional charges and fees associated with renewal may be applied.

Debt collection practices and other related procedures may be performed. All the actions related to these practices are adjusted to Fair Debt Collection Practices Act regulations and other applicable federal and state laws in order to protect consumers from unfair lending and negative borrowing experience. The majority of lenders do not refer to outside collection agencies and attempt to collect the debt via in-house means.

Non-payment and late payment may have negative impact on the borrowers’ credit standing and downgrade their credit scores, as the lenders may report delinquency to credit bureaus, including but not limited to Equifax, Transunion, and Experian. In this case the results of non-payment and late payment may be recorded and remain in credit reports for the determined amount of time.