A payday loan is a short term loan taken from a private business rather
than a bank and it becomes due on the next payday of the borrower. The
security for such a loan is a check signed by the borrower, the amount
of which is equal to the amount of loan plus the charges (interest)
incurred on the same, which happens to be a massive one, sometimes going
up to four hundred per cent.
Payday loans are a tempting option for such people who are looking for quick money and are willing to pay such an exorbitant rate of interest to get the loan. Such people take these loans from various payday lenders, which makes things worse when it comes to repayment of these loans. It is literally like the person falls into the vicious habit of taking such loans, without bothering about the high rate of interest in the first place and then finding it difficult to repay such loans when they become due. Perhaps, this is the reason of the default rate being high for the payday loans.
Payday Loans- The Procedure
Lenders doing the business of payday loan advertise great looking offers on radio, television and internet and entice people to approach them for short term, high rate loans, which prove to be very expensive deals in the long run. The procedure of taking such a loan involves the borrower giving a post dated personal check to the lender, the amount of the check being the value of the loan added to the amount of interest to be charged on the same.
The due date of the check is usually the next payday of the borrower, as the name of the loan implies. The check is kept by the lender as a security till the due date of the loan. On the due date, which is generally the next payday of the borrower, the check is either deposited by the lender in the bank or the borrower takes it back by repaying the loan. In case the borrower is not in the position to repay the loan on the due date, the loan is rolled over or extended to the next payday, with an extra finance charge and more interest, usually at an increased rate. The thing taken into account while extending such a loan to the borrower, is his previous employment record to make sure whether he is having a previous payroll or not.
To know more about Payday Loans Grand Rapids just do click here.
Payday loans are a tempting option for such people who are looking for quick money and are willing to pay such an exorbitant rate of interest to get the loan. Such people take these loans from various payday lenders, which makes things worse when it comes to repayment of these loans. It is literally like the person falls into the vicious habit of taking such loans, without bothering about the high rate of interest in the first place and then finding it difficult to repay such loans when they become due. Perhaps, this is the reason of the default rate being high for the payday loans.
Payday Loans- The Procedure
Lenders doing the business of payday loan advertise great looking offers on radio, television and internet and entice people to approach them for short term, high rate loans, which prove to be very expensive deals in the long run. The procedure of taking such a loan involves the borrower giving a post dated personal check to the lender, the amount of the check being the value of the loan added to the amount of interest to be charged on the same.
The due date of the check is usually the next payday of the borrower, as the name of the loan implies. The check is kept by the lender as a security till the due date of the loan. On the due date, which is generally the next payday of the borrower, the check is either deposited by the lender in the bank or the borrower takes it back by repaying the loan. In case the borrower is not in the position to repay the loan on the due date, the loan is rolled over or extended to the next payday, with an extra finance charge and more interest, usually at an increased rate. The thing taken into account while extending such a loan to the borrower, is his previous employment record to make sure whether he is having a previous payroll or not.
To know more about Payday Loans Grand Rapids just do click here.
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