Payday loans is a term used to describe a loan to an individual with low or no credit and the loan is due and payable along with interest at the time of the borrower’s next payday. Therefore, payday loans are often called for quick cash loans.
Since the credit risk is greater with this type of loan than it would be if the loan were to be taken out at a bank or credit union, the borrower will have a higher expense with this type of loan. However he or she is probably unable to obtain a regular loan anyway.
In these economic times there have been many workers who have been displaced, lost their jobs, their employers have gone out of business, or they have been downsized.
Therefore there are many families whose credit has been severely affected in a very negative sense, and who have very little recourse for obtaining emergency funds from what would be considered to be normal channels.
Consequently, the payday loan phenomenon has risen to the occasion in that if a potential borrower can demonstrate that they have a steady income and that they own a checking account, they can make an online application for the loan, and if they qualify the money can be direct deposited right into their checking account in am matter of days.
The loan will usually be due and payable by the time of their next payday, and if the borrower can demonstrate that he or she is competent and reliable enough to pay back the loan with interest, they other terms may be offered such as installment payments for future loans.
Financial emergencies such as automobile breakdowns, medical emergencies, and out of town illnesses with relatives can crop up without a moment’s warning, and with out payday loans being available, many families would be without any recourse for emergency money.