Understanding the nitty gritties of the payday loans
A little about the payday loan:
Payday loans are characterized by a short term loan that will be due on the subsequent payday after the borrowing is done. Therefore, in the simplest of terms the payday loan is not your conventional loan which you borrow after loads of hassles and also with tons and tons of paperwork.
For easier understanding of the loan, we have broken down the ingredients of the payday in points. This way it will be easy to appreciate the good and the not so good points about the payday loans.
- The loan is for only a small sum of money:
The maximum amount that you can procure a payday loan for is pegged at a few thousands of the currency. There is some statutory entitlement for a first time applicant as well. But once you are a regular borrower, you can borrow even up to the maximum that the lender allows in his portfolio.
- The subsequent payday after the date of borrowing is the due date for the repayment of the loan:
However small the sum of money is that is seeked to be borrowed is; the repayment date or the due date is by default set only at the subsequent date from the date of the borrowing of the loan. The amount of the loan can be also foreclosed and paid before the due date approaches. The money can be directly also instructed to the bank to be given at the source itself from the credit of salary.
A lot of lenders will procure post dated checks from the borrowers for the amount of the loan along with the compound interest calculable at the payday that is approaching. On the prescribed payday, the lender will present that post dated check at the borrower’s bank and claim his money back.
- Payday loan is a short term loan:
Payday loan is a short term loan. The maximum time limit that the entire payday loan can be completed is three months only. The due date is the first payday that comes after the date of borrowing. The borrower may choose to even foreclose the loan by paying earlier than the coming payday if resources permit him to.
- Unsecured loan:
Since the loan is an unsecured one meaning that there is no security collateral that is expected to be furnished, the borrower will be expected to give the lender post dated checks in order that if there is a default by the borrower and the payday loan is not repaid on the date on the payday, the lender may present the check at his bank and recover his amount in full. The amount on the check will be calculated along with the rate of the interest as well.
So, there you are. Now you know that unsecured loans can be procured at short notices and for a short term without the lengthy hassles of the conventional loan procurement that our parents did.
What about the purpose of borrowing your loan?
That is definitely none of their business. The loan is borrowed and there is no question asked regarding the purpose of borrowing. Period!Any verification needed for the procurement as such of payday loans?
In fact differ from lender to lender. While some lenders will ask to fill up the form and require a photocopy of the salary slip there are yet a few others who will sanction an online loan only at the instance of the borrower filling up an online form.
- The borrower must be a citizen of the United Kingdom (UK);
- The age of the borrower must be 18 years and above;
- The borrower must be in a job and be able to furnish a proof of steady income;
- The borrower must have an operational bank account in the UK itself.
Fee and cost:
There is no scope for any fee or cost for processing the payday loan. The borrower has the upper hand while he applies for the loan. The lender sanctions the loan in good faith believing him to be a normal person with a god character who intends to return back the money borrowed.
However in case of any default the lender’s position is also safe as he has already procured post dated checks from the borrower and in event of the person bot turning up with the stipulated repayment amount, the lender can present the check at the borrower’s bank and claim to be reimbursed for the amount so lent directly from his account.