A cash advance payday loan in the UK is basically a short-term cash advance. These cash advances are actually quite common in places like the UK and the US.
Payday loans can have high interest. But there are some payday loans that you can get in the UK for interest rates that are quite low compared to other services.
How Does One Get The Loan?
Loan application is easy. And since this is a payday loan, it is even easier to get one. This is because the cash advance payday loan in the UK is usually taken to cover ones expenses until the next payday when it can be paid back. So the advanced payday is usually just something of a short-term loan.
A payday loan’s typical interest rate can start at 390 percent. But this is dependent on the service where one is applying for the loan. The loan itself can be taken from private institutions that offer them to people who cannot get loans from the bank or from other financing places.
Now, you can easily apply and get cash advance loans online. So to get a loan such as this one, a person simply has to look for a lender who is willing, regardless of the credit history of a borrower.
The Typical Retail Way
In such case, one can simply go to a lending store to get the small and short-term cash loan. It is agreed that the full payment of the loan will be made with the next paycheck of the borrower.
Usually, the borrower is given a two-week term. The borrower can issue a post-dated check and give it to the lender. The check should have the full amount borrowed plus the loan fees. This is to make sure that if the borrower does not go back to the lender to pay back the loan, the loan store representative can cash the check. However, if there are no sufficient funds in the bank of the borrower, then this is when loan stores can place additional fees because of the borrower’s failure to pay.
This is why lenders ask for some proof that the borrower can pay. So they are asked to present proof of income before they can avail of a cash advance payday loan in the UK.
Sunday, December 28, 2008
Friday, December 26, 2008
Who’s Offering Payday Loans
If you are looking for a payday loan company, you may want to consider researching online. Many of them simply process оr refer applications tо larger financing companies. With оvеr $43 billion in payday loans being processed annually, large financial companies, such аs Wells Fargo, Citifinancial, аnd MBNA, hаvе become involved. yоu will аlsо find regional аnd small subprime lenders who focus solely оn payday loans.
Varying Processes
With FDIC institutions, thе application process саn bе mоrе stringent. Payday loans аrе known tо bе high-risk. Larger financing companies try tо screen оut sоmе applications by requiring higher income levels аnd researching checking account history.
However, thеrе аrе niche payday lenders who оnly require identification, а source оf income, аnd аn open checking account. Online payday loan companies аlsо hаvе faxless application, requiring less paperwork.
Besides application differences, payday loan companies аlsо handle payments differently. Traditional companies will require yоu tо write а postdated check, whiсh thеy will cash оn yоur payday. Online lenders debit yоur payment automatically. thеy аlsо wire money directly tо yоur account sо yоu don’t hаvе tо hassle with waiting for а check tо clear аt yоur bank.
Identifying Scammers
Some companies identifying themselves аs payday loan companies аrе actually fishing for yоur information. Thеsе companies аrе usually located overseas аnd аrе difficult tо prosecute.
Good sense саn protect yоu from thеsе companies. Don’t hand оut yоur financial information tо third party sites whо promise tо refer you. аlsо look for information оn finance fees аnd payment options. If аn offer seems tоо good tо bе true, check it out. Contact thе lender tо speak with а representative. If thеy аrе unprepared tо answer yоur financial questions, chances аrе thеy aren’t legitimate.
Finding thе Best Lender
Be sure yоu compare lenders. By researching online, yоu саn quickly find thе best rates аnd terms. Also, request financial information bеfоrе yоu commit tо а lender.
Varying Processes
With FDIC institutions, thе application process саn bе mоrе stringent. Payday loans аrе known tо bе high-risk. Larger financing companies try tо screen оut sоmе applications by requiring higher income levels аnd researching checking account history.
However, thеrе аrе niche payday lenders who оnly require identification, а source оf income, аnd аn open checking account. Online payday loan companies аlsо hаvе faxless application, requiring less paperwork.
Besides application differences, payday loan companies аlsо handle payments differently. Traditional companies will require yоu tо write а postdated check, whiсh thеy will cash оn yоur payday. Online lenders debit yоur payment automatically. thеy аlsо wire money directly tо yоur account sо yоu don’t hаvе tо hassle with waiting for а check tо clear аt yоur bank.
Identifying Scammers
Some companies identifying themselves аs payday loan companies аrе actually fishing for yоur information. Thеsе companies аrе usually located overseas аnd аrе difficult tо prosecute.
Good sense саn protect yоu from thеsе companies. Don’t hand оut yоur financial information tо third party sites whо promise tо refer you. аlsо look for information оn finance fees аnd payment options. If аn offer seems tоо good tо bе true, check it out. Contact thе lender tо speak with а representative. If thеy аrе unprepared tо answer yоur financial questions, chances аrе thеy aren’t legitimate.
Finding thе Best Lender
Be sure yоu compare lenders. By researching online, yоu саn quickly find thе best rates аnd terms. Also, request financial information bеfоrе yоu commit tо а lender.
Wednesday, December 24, 2008
Payday Loans - Controversy and criticism II
Payday loans have definitely received considerable controversy. This is where the ‘cons’ enter as critics claim that lenders target the helpless poor and the innocent young adults. These people, as the critics say, don’t understand the importance of money. They even call lenders as loan sharks because of the high interest charges which can reach as high as 250% depending on the credit score of the borrower and the loan amount.
People who belong in the middle class are even better off using credit cards instead of obtaining payday loans because the interest charges are about 25% only. So you see, the poor sector and the young adults pay a much higher interest on the loans.
If there are critics, then there are also proponents of payday loans. They want to impart to the people the ‘pros’ or the benefits that you can derive in applying for payday loans. Proponents claim that the short-term payday loans are much better than the long-term loans offered by national banks. The processing charges are much less as compared to the long term loan applications.
Some supporters also claim that in the event of late credit card payments or bouncing checks wherein the borrower incurs expenses, the costs incurred by payday loan borrowers are still much less. The conventional interests are not that profitable and even New York’s Federal Bank Reserve claimed that the loans can support cash flow in between paydays.
Families can enjoy living a much better life with the aid of the payday loans especially when urgent need for cash is required. The mothly budget will not have to suffer because there is an alternative source of instant cash. Another good thing about the loans is that individuals with low credit scores can also avail since it is not included in their criteria. Their criteria for applying loans include the age, the job and salary, and a checking account.
Once you comply with these criteria, you can already avail of the loan. There is no need to fax documents and other important information because everything is done online. You just need to provide a few details about yourself and fill out the application form. After that, you can already submit the application and wait until the cash amount is transferred to your account. So you see, the convenience is all there and you can just repay the loan amount on your next payday.
If you think that the pros outweigh the cons, then you can take advantage of these payday loans. The decision is entirely yours. Besides, the payday loans are designed to meet urgent need for cash and it is not intended to be used for everyday consumption. When you need cash badly and you’re unable to borrow from relatives or friends, this is the best solution that you can get.
Still, if you can save a little amount every month to cover unexpected expenses, all the better.As a responsible adult, you should know how to handle all your expenses, even the urgent ones. If you have savings, then you will not borrow money. Just in case you borrow through payday loans, make sure that you pay on time so that you will not have problems in the future, especially that concerning your credit records.
Related Posts:
Payday Loans - Controversy and criticism
People who belong in the middle class are even better off using credit cards instead of obtaining payday loans because the interest charges are about 25% only. So you see, the poor sector and the young adults pay a much higher interest on the loans.
If there are critics, then there are also proponents of payday loans. They want to impart to the people the ‘pros’ or the benefits that you can derive in applying for payday loans. Proponents claim that the short-term payday loans are much better than the long-term loans offered by national banks. The processing charges are much less as compared to the long term loan applications.
Some supporters also claim that in the event of late credit card payments or bouncing checks wherein the borrower incurs expenses, the costs incurred by payday loan borrowers are still much less. The conventional interests are not that profitable and even New York’s Federal Bank Reserve claimed that the loans can support cash flow in between paydays.
Families can enjoy living a much better life with the aid of the payday loans especially when urgent need for cash is required. The mothly budget will not have to suffer because there is an alternative source of instant cash. Another good thing about the loans is that individuals with low credit scores can also avail since it is not included in their criteria. Their criteria for applying loans include the age, the job and salary, and a checking account.
Once you comply with these criteria, you can already avail of the loan. There is no need to fax documents and other important information because everything is done online. You just need to provide a few details about yourself and fill out the application form. After that, you can already submit the application and wait until the cash amount is transferred to your account. So you see, the convenience is all there and you can just repay the loan amount on your next payday.
If you think that the pros outweigh the cons, then you can take advantage of these payday loans. The decision is entirely yours. Besides, the payday loans are designed to meet urgent need for cash and it is not intended to be used for everyday consumption. When you need cash badly and you’re unable to borrow from relatives or friends, this is the best solution that you can get.
Still, if you can save a little amount every month to cover unexpected expenses, all the better.As a responsible adult, you should know how to handle all your expenses, even the urgent ones. If you have savings, then you will not borrow money. Just in case you borrow through payday loans, make sure that you pay on time so that you will not have problems in the future, especially that concerning your credit records.
Related Posts:
Payday Loans - Controversy and criticism
Tuesday, December 23, 2008
Even As We Celebrate, Some Can't Get Enough To Eat This Christmas!
The Christmas holidays are a big time for people to get payday loans if they want them. Giving of gifts, traveling and having to put up and feed relatives who come to town creates more need for extra cash. Though the fun can never be outweighed.
However, this may be a good time to reflect on just how lucky we are to live in one of the richest nations on earth. It seems kind of maudlin to say, but it is the truth.
Many others across the globe would be thankful just to have clean drinking water, enough food to feed their kids or some basic antibiotics to fight off diseases that were cured or done away with over a century ago in the core nations.
Payday loans give us a whole lot of conveniences to manage our finances and sudden expenditures that need to be met. This thus blindfolds us from reflecting that somewhere around the globe, people are suffering and finding it hard just to have three square meals a day.
As we celebrate this Christmas, let us join hands together and pray for economic improvement in certain countries!
However, this may be a good time to reflect on just how lucky we are to live in one of the richest nations on earth. It seems kind of maudlin to say, but it is the truth.
Many others across the globe would be thankful just to have clean drinking water, enough food to feed their kids or some basic antibiotics to fight off diseases that were cured or done away with over a century ago in the core nations.
Payday loans give us a whole lot of conveniences to manage our finances and sudden expenditures that need to be met. This thus blindfolds us from reflecting that somewhere around the globe, people are suffering and finding it hard just to have three square meals a day.
As we celebrate this Christmas, let us join hands together and pray for economic improvement in certain countries!
Sunday, December 21, 2008
Business not booming for payday lenders II
"They still want to buy for their kids," he said. "But maybe not for aunts, uncles and everybody else."
Payday loans, sometimes called cash advance loans, are short-term loans that charge high annual rates. Lenders insist that because the loans are of such short terms, it is unfair to compare their rates to traditional lenders.
In a typical transaction, the borrower writes a check to the lender, and the lender advances money on the check, which is to be deposited at a later date.
When the loan matures, the borrower has the option of paying back the loan or allowing the lender to cash the check.
A typical fee is $17.50 per $100, meaning a maximum $500 loan would cost $87.50 in lending fees.
Smith, who has been in the business for six years, said he did not expect a downturn in lending, even though traditional lenders have reported less borrowing for months.
"This is my first downturn in the industry," he said. "We just haven't seen it happen."
That is bad news for the lenders, who say they are much like retailers in depending on the holiday season.
The first few months of a year are traditionally slow, Hunter said.
People usually cut back on spending on the heels of Christmas, and then people start receiving tax refunds, reducing the need for short-term loans.
While demand is down, the lenders said late payments and defaults are up.
Lenders normally ask a borrower for his or her address, phone number, work location and checking information. Lenders verify as much as they can, but Cross said it is important to keep the transaction simple.
That means taking people's word for much of the information.
"We will call and verify they still work there," he said. "As far as the banking information, you have the most recent 30-day statement, and you hope it is still open."
That doesn't always work, Smith said.
"We are seeing a higher default rate," he said. "That has been happening since about the beginning of 2008."
All three lenders blamed the rising default rates on the economic downturn. People want to repay the loans, but job losses and other cuts to income make it impossible.
Borrow Smart's survey found the same reasons for the overall decline in lending. More than 92 percent of lenders who reported a decline blamed it at least partly on the economy.
Interestingly, of the minority of lenders who were doing more business, 85 percent said it was because of the economy.
"Some may feel a greater need to borrow due to the economy and they come in," the group said. "Some may feel the need to borrow, but they stay away because they are uncertain of their ability to repay."
READ ALSO:
Business not booming for payday lenders I
Payday loans, sometimes called cash advance loans, are short-term loans that charge high annual rates. Lenders insist that because the loans are of such short terms, it is unfair to compare their rates to traditional lenders.
In a typical transaction, the borrower writes a check to the lender, and the lender advances money on the check, which is to be deposited at a later date.
When the loan matures, the borrower has the option of paying back the loan or allowing the lender to cash the check.
A typical fee is $17.50 per $100, meaning a maximum $500 loan would cost $87.50 in lending fees.
Smith, who has been in the business for six years, said he did not expect a downturn in lending, even though traditional lenders have reported less borrowing for months.
"This is my first downturn in the industry," he said. "We just haven't seen it happen."
That is bad news for the lenders, who say they are much like retailers in depending on the holiday season.
The first few months of a year are traditionally slow, Hunter said.
People usually cut back on spending on the heels of Christmas, and then people start receiving tax refunds, reducing the need for short-term loans.
While demand is down, the lenders said late payments and defaults are up.
Lenders normally ask a borrower for his or her address, phone number, work location and checking information. Lenders verify as much as they can, but Cross said it is important to keep the transaction simple.
That means taking people's word for much of the information.
"We will call and verify they still work there," he said. "As far as the banking information, you have the most recent 30-day statement, and you hope it is still open."
That doesn't always work, Smith said.
"We are seeing a higher default rate," he said. "That has been happening since about the beginning of 2008."
All three lenders blamed the rising default rates on the economic downturn. People want to repay the loans, but job losses and other cuts to income make it impossible.
Borrow Smart's survey found the same reasons for the overall decline in lending. More than 92 percent of lenders who reported a decline blamed it at least partly on the economy.
Interestingly, of the minority of lenders who were doing more business, 85 percent said it was because of the economy.
"Some may feel a greater need to borrow due to the economy and they come in," the group said. "Some may feel the need to borrow, but they stay away because they are uncertain of their ability to repay."
READ ALSO:
Business not booming for payday lenders I
Business Not Booming for Payday Lenders I
Payday lenders expecting a Christmas boom this year are instead finding little holiday spirit among their customers.
Several chains of stores operating in the Montgomery area say the annual spike in the final five or six weeks of the year didn't happen this year, reflecting a the results found in a survey conducted by Borrow Smart Alabama, an industry trade association.
The survey shows that more payday owners are reporting a decline in business this year, with about three times as many reporting a decline in December as reported an increase in lending.
Bill Smith, who owns Easy Money stores, said customers who turn to payday lenders are like everyone else this year and are cutting back.
That means using available funds for holiday purchases and not borrowing.
"Our customers are trying to do a cash Christmas this year," he said.
Smith, along with other owners, sees the end of the year as a chance to boost the bottom line. Borrow Smart's survey found that more than 92 percent of respondents said December's loan volume is heavier than other months in a normal year.
"Bottom line, our business is down year-over-year, and it seems to be getting worse in December," the association said of industry trends.
Other lenders reported much the same thing.
Charles Hunter, owner of The Money Store, and Bill Cross, of 1 Stop Cash, both said the holiday season has been flat at their locations.
"We didn't get the spike," he said. "We are off a little bit."
Hunter said his lending was about equal to 2007 and actually is a little better than the two previous months.
"November had everybody scared," he said. "Everybody was so cautious."
Smith said his customers are looking for ways to cut expenses, and Christmas gifts are one of the first places they start.
"They still want to buy for their kids," he said. "But maybe not for aunts, uncles and everybody else."
Payday loans, sometimes called cash advance loans, are short-term loans that charge high annual rates. Lenders insist that because the loans are of such short terms, it is unfair to com-pare their rates to traditional lenders.
In a typical transaction, the borrower writes a check to the lender, and the lender advances money on the check, which is to be deposited at a later date.
Several chains of stores operating in the Montgomery area say the annual spike in the final five or six weeks of the year didn't happen this year, reflecting a the results found in a survey conducted by Borrow Smart Alabama, an industry trade association.
The survey shows that more payday owners are reporting a decline in business this year, with about three times as many reporting a decline in December as reported an increase in lending.
Bill Smith, who owns Easy Money stores, said customers who turn to payday lenders are like everyone else this year and are cutting back.
That means using available funds for holiday purchases and not borrowing.
"Our customers are trying to do a cash Christmas this year," he said.
Smith, along with other owners, sees the end of the year as a chance to boost the bottom line. Borrow Smart's survey found that more than 92 percent of respondents said December's loan volume is heavier than other months in a normal year.
"Bottom line, our business is down year-over-year, and it seems to be getting worse in December," the association said of industry trends.
Other lenders reported much the same thing.
Charles Hunter, owner of The Money Store, and Bill Cross, of 1 Stop Cash, both said the holiday season has been flat at their locations.
"We didn't get the spike," he said. "We are off a little bit."
Hunter said his lending was about equal to 2007 and actually is a little better than the two previous months.
"November had everybody scared," he said. "Everybody was so cautious."
Smith said his customers are looking for ways to cut expenses, and Christmas gifts are one of the first places they start.
"They still want to buy for their kids," he said. "But maybe not for aunts, uncles and everybody else."
Payday loans, sometimes called cash advance loans, are short-term loans that charge high annual rates. Lenders insist that because the loans are of such short terms, it is unfair to com-pare their rates to traditional lenders.
In a typical transaction, the borrower writes a check to the lender, and the lender advances money on the check, which is to be deposited at a later date.
Instant Cash Payday Loans
Payday loans can be said to have associated itself very well with the internet, which is more than a medium of providing information for finance institutions. Institutions have assumed its merits and developed it to provide loan service under the tag named as internet payday loans. All the processes and transaction is carried though this wired device and aid cash in urgent financial situations. If you are compelled under circumstances, to make emergency and unexpected payments, for which you are not prepared financially, then consider the internet payday loans. It is a loan scheme free from the typical practice of placing collateral.
The tradition of using collateral is substituted by simple criteria. Under this loan terms, the basic eligibility is: applicants should be a permanent employee and hold an active valid account. Considering internet payday loans can easily get you out from the dilemma of arranging cash instantly. Cash is transferred the same day or next business day. Online payday loans support applicants by releasing cash mounting from $100 to $1,000. Any amount borrowed has to be reimbursed within 30 days from date of approval. The provisions are unlocked and let flow for both good and adverse credit holders if they qualify and meet the mentioned principles.
The interest charges of online payday loans are easily affordable. For any queries of internet payday loans, just feel free to call customer service center or visit lender's office. This is a loan that is schemed taking economic disparity into account. But you should always cling to the rational and low rates that can be easily repaid. You can approve the cash from any corner of the world. Now, make urgent payments like medical bills, electricity bills, grocery bills, school fees, as well in the most easiest way.
Payday Loans online reimbursement are the easiest and flexible way that has ever been introduced in any loan scheme. The customers and borrowers can fix due date according to their suitability and repay in an easy way. This concession can be subscribed by informing lender's office and paying an extra fee.
The tradition of using collateral is substituted by simple criteria. Under this loan terms, the basic eligibility is: applicants should be a permanent employee and hold an active valid account. Considering internet payday loans can easily get you out from the dilemma of arranging cash instantly. Cash is transferred the same day or next business day. Online payday loans support applicants by releasing cash mounting from $100 to $1,000. Any amount borrowed has to be reimbursed within 30 days from date of approval. The provisions are unlocked and let flow for both good and adverse credit holders if they qualify and meet the mentioned principles.
The interest charges of online payday loans are easily affordable. For any queries of internet payday loans, just feel free to call customer service center or visit lender's office. This is a loan that is schemed taking economic disparity into account. But you should always cling to the rational and low rates that can be easily repaid. You can approve the cash from any corner of the world. Now, make urgent payments like medical bills, electricity bills, grocery bills, school fees, as well in the most easiest way.
Payday Loans online reimbursement are the easiest and flexible way that has ever been introduced in any loan scheme. The customers and borrowers can fix due date according to their suitability and repay in an easy way. This concession can be subscribed by informing lender's office and paying an extra fee.
Saturday, December 20, 2008
Christmas Payday Loans
The season of Christmas is associated with celebrating the occasion in a big way and enjoying life. There are a good number of people who choose to go to a short holiday tour which makes the celebrations even more enjoyable and memorable. To finance the tour however, you may require some more extra cash. But maybe you lack money and instant help is searched around. In such a situation, you can borrow money instantly from lenders who provide Christmas cash holiday loans.
Christmas holiday loans are provided for celebrating Christmas. These types of loans are flexible and fast to get as these loans are instantly approved within hours. The lender deposits loan amount in your bank electronically within 24 hours of receiving the loan application. Obviously, you can enjoy the money the same day. Through the loan money you can enjoy holiday around your locality, have a tour to amusement park, go for shopping etc. It helps to have a Christmas loan.
Christmas payday loans are given against your next paycheck. The loan amount ranges from £$100 to $1000 but depending on your monthly salary, you can even borrow up to $1500. Christmas loans are approved for two weeks. You are supposed to return the loan at the time of next paycheck. In approving the loan, the lenders only verify that you are an employee for past some months at least and drawing a fixed monthly salary. These are unsecured loans as lenders take no security from any type of borrowers of Christmas payday loans.
But you must be aware of the fact that because of being unsecured and of very short term, you can get low interest pay day loans with no taxing. You should opt for the loan only when there is no alternative or only for urgency.
Lenders do not check credit score at all in approving Christmas payday loans. So bad credit borrowers can even enjoy the loan to celebrate Christmas. What’s more? On timely repaying, the loan helps in improving the borrower's credit score substantially.
Only those borrowers who are at least 18 years of age and employed with regular monthly salary are qualified for the loan. Ensure paying back the loan in time or the lender will be charging enhanced fee for the Christmas payday loans.
Christmas holiday loans are provided for celebrating Christmas. These types of loans are flexible and fast to get as these loans are instantly approved within hours. The lender deposits loan amount in your bank electronically within 24 hours of receiving the loan application. Obviously, you can enjoy the money the same day. Through the loan money you can enjoy holiday around your locality, have a tour to amusement park, go for shopping etc. It helps to have a Christmas loan.
Christmas payday loans are given against your next paycheck. The loan amount ranges from £$100 to $1000 but depending on your monthly salary, you can even borrow up to $1500. Christmas loans are approved for two weeks. You are supposed to return the loan at the time of next paycheck. In approving the loan, the lenders only verify that you are an employee for past some months at least and drawing a fixed monthly salary. These are unsecured loans as lenders take no security from any type of borrowers of Christmas payday loans.
But you must be aware of the fact that because of being unsecured and of very short term, you can get low interest pay day loans with no taxing. You should opt for the loan only when there is no alternative or only for urgency.
Lenders do not check credit score at all in approving Christmas payday loans. So bad credit borrowers can even enjoy the loan to celebrate Christmas. What’s more? On timely repaying, the loan helps in improving the borrower's credit score substantially.
Only those borrowers who are at least 18 years of age and employed with regular monthly salary are qualified for the loan. Ensure paying back the loan in time or the lender will be charging enhanced fee for the Christmas payday loans.
Friday, December 19, 2008
Payday Loans - Controversy and criticism
Payday lending is a controversial practice and faces both legal battles and public perception challenges in nearly every place where it is practiced. In the UK, David Drew MP signed an early day motion criticizing the payday lending market for high APRs and for locking customers into a "cycle of credit dependency"; it also noted the growth of Dollar Financial, a US-based payday lending company trading as Moneyshop in the UK, and called for a public inquiry into the growth of high cost lending in general and payday lending in particular.
Exploiting financial hardship for profit
Critics such as Consumers Union blame payday lenders for exploiting people's financial hardship for profit. They say lenders target the young and the poor, particularly those near military bases and in low-income communities. They also say that borrowers may not understand that the high interest rates are likely to trap them in a "debt-cycle," where they have to repeatedly renew the loan and pay associated fees every two weeks until they can finally save enough to pay off the principal and get out of debt. Critics also say that payday lending unfairly disadvantages the poor, compared to the middle class who pay at most 25% or so on their credit cards.
However, opponents of government regulation of payday loan businesses argue that some individuals that require the use of payday loans have already exhausted or ruined any other alternatives. Tom Lehman, an advocate of unfettered payday lending, said,
Payday lending services extend small amounts of uncollateralized credit to high-risk borrowers, and provide loans to poor households when other financial institutions will not. Throughout the past decade, this "democratization of credit" has made small loans available to mass sectors of the population, and particularly the poor, that would not have had access to credit of any kind in the past.
Lehman attacked proponents of increased regulation of the lending industry, arguing that,
These allegations against the payday-lending industry are largely without merit, and generally reflect the views of "do-gooder" anticapitalist elites who abhor the "messy" and unplanned outcomes in low-income consumer finance markets. Rather than seeing payday lending practices as a creative extension of credit to poor households who may otherwise be without loans, these critics see it as yet another opportunity for government intervention in the name of "helping" the poor.
Lehman has in turn been criticized for presenting himself as an independent voice while taking money from the payday loan industry.
Aggressive advertising practices
Debt charity Credit Action made a complaint to the UK Office of Fair Trading (OFT) that payday lenders were placing adverts on social network website Facebook which broke advertising regulations. Their main complaint was that the APR was either not displayed at all or not displayed prominently enough, which is clearly required by UK advertising standards.
Aggressive collection practices
In US law, a payday lender can use only the same industry standard collection practices used to collect other debts.
In many cases, the borrower has written a post-dated check to the lender; if the borrower defaults, then this check will bounce. Some payday lenders have therefore threatened delinquent borrowers with criminal prosecution, for check fraud. This practice is illegal in many jurisdictions.
Ignoring legal restrictions
Payday lenders have been known to ignore usury limits and charge higher amounts than they are entitled to by law. On May 30, 2008, the Illinois Department of Financial and Professional Regulation fined Global Payday Loan $234,000—the largest fine in Illinois history against a payday lender—for exceeding the $15.50 per $100 limit on charges for payday loans. A customer, known only as J.M., borrowed $300 and repaid $360 ($13.50 more than the company was legally entitled to collect under the Illinois Payday Loan Reform Act), but the company was still sending her warnings that her account was 'seriously delinquent' and that her unpaid balance was $630.
Pricing structure of payday loans
Issuers of payday loans defend their higher interest rates by saying processing costs for payday loans do not differ much from other loans, including home mortgages.[citation needed] They argue that conventional interest rates for lower dollar amounts and shorter terms would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would generate only 38 cents of interest, which would fail to match loan processing costs.
Critics say payday lenders' processing costs are significantly lower than costs for mortgages and other traditional loans. Payday lenders usually look at recent pay-stubs, whereas larger-loan lenders do full credit checks and make a determination about the borrower's ability to pay back the loan.
Net profitability
A study by the FDIC Center for Financial Research found “operating costs lie in the range of advance fees” collected and that, after subtracting fixed operating costs and “unusually high rate of default losses,” payday loans “may not necessarily yield extraordinary profits.” Based on the annual reports of publicly traded payday loan companies, loan losses can average 15% or more of loan revenue. Underwriters of payday loans must also deal with people presenting fraudulent checks as security or making stop payments.
Critics concede that some borrowers may default on the loans, but point to the industry's pace of growth as an indication of its profitability. Consumer advocates condemn the practice as a whole, regardless of its profitability, because it "takes advantage of consumers who are already hard-pressed to pay their debts".
Proponents' stance
Proponents claim that cash advance loans provide a service that is not available from other sources. Many credit unions have attempted to offer similar products, but have been unable to do so without government subsidies or grants, a fact that many lenders and reports have highlighted. Furthermore, most of these programs offered by credit unions have ended due to the high default rates of borrowers.
A staff report released by the Federal Reserve Bank of New York concluded that payday loans should not be categorized as "predatory" since they may improve household welfare. "Defining and Detecting Predatory Lending" reports "if payday lenders raise household welfare by relaxing credit constraints, anti-predatory legislation may lower it." The author of the report, Donald P. Morgan, defined predatory lending as "a welfare reducing provision of credit." However, he also noted that loans are very expensive, and that they are likely to be made to under-educated households or households of uncertain income.
Exploiting financial hardship for profit
Critics such as Consumers Union blame payday lenders for exploiting people's financial hardship for profit. They say lenders target the young and the poor, particularly those near military bases and in low-income communities. They also say that borrowers may not understand that the high interest rates are likely to trap them in a "debt-cycle," where they have to repeatedly renew the loan and pay associated fees every two weeks until they can finally save enough to pay off the principal and get out of debt. Critics also say that payday lending unfairly disadvantages the poor, compared to the middle class who pay at most 25% or so on their credit cards.
However, opponents of government regulation of payday loan businesses argue that some individuals that require the use of payday loans have already exhausted or ruined any other alternatives. Tom Lehman, an advocate of unfettered payday lending, said,
Payday lending services extend small amounts of uncollateralized credit to high-risk borrowers, and provide loans to poor households when other financial institutions will not. Throughout the past decade, this "democratization of credit" has made small loans available to mass sectors of the population, and particularly the poor, that would not have had access to credit of any kind in the past.
Lehman attacked proponents of increased regulation of the lending industry, arguing that,
These allegations against the payday-lending industry are largely without merit, and generally reflect the views of "do-gooder" anticapitalist elites who abhor the "messy" and unplanned outcomes in low-income consumer finance markets. Rather than seeing payday lending practices as a creative extension of credit to poor households who may otherwise be without loans, these critics see it as yet another opportunity for government intervention in the name of "helping" the poor.
Lehman has in turn been criticized for presenting himself as an independent voice while taking money from the payday loan industry.
Aggressive advertising practices
Debt charity Credit Action made a complaint to the UK Office of Fair Trading (OFT) that payday lenders were placing adverts on social network website Facebook which broke advertising regulations. Their main complaint was that the APR was either not displayed at all or not displayed prominently enough, which is clearly required by UK advertising standards.
Aggressive collection practices
In US law, a payday lender can use only the same industry standard collection practices used to collect other debts.
In many cases, the borrower has written a post-dated check to the lender; if the borrower defaults, then this check will bounce. Some payday lenders have therefore threatened delinquent borrowers with criminal prosecution, for check fraud. This practice is illegal in many jurisdictions.
Ignoring legal restrictions
Payday lenders have been known to ignore usury limits and charge higher amounts than they are entitled to by law. On May 30, 2008, the Illinois Department of Financial and Professional Regulation fined Global Payday Loan $234,000—the largest fine in Illinois history against a payday lender—for exceeding the $15.50 per $100 limit on charges for payday loans. A customer, known only as J.M., borrowed $300 and repaid $360 ($13.50 more than the company was legally entitled to collect under the Illinois Payday Loan Reform Act), but the company was still sending her warnings that her account was 'seriously delinquent' and that her unpaid balance was $630.
Pricing structure of payday loans
Issuers of payday loans defend their higher interest rates by saying processing costs for payday loans do not differ much from other loans, including home mortgages.[citation needed] They argue that conventional interest rates for lower dollar amounts and shorter terms would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would generate only 38 cents of interest, which would fail to match loan processing costs.
Critics say payday lenders' processing costs are significantly lower than costs for mortgages and other traditional loans. Payday lenders usually look at recent pay-stubs, whereas larger-loan lenders do full credit checks and make a determination about the borrower's ability to pay back the loan.
Net profitability
A study by the FDIC Center for Financial Research found “operating costs lie in the range of advance fees” collected and that, after subtracting fixed operating costs and “unusually high rate of default losses,” payday loans “may not necessarily yield extraordinary profits.” Based on the annual reports of publicly traded payday loan companies, loan losses can average 15% or more of loan revenue. Underwriters of payday loans must also deal with people presenting fraudulent checks as security or making stop payments.
Critics concede that some borrowers may default on the loans, but point to the industry's pace of growth as an indication of its profitability. Consumer advocates condemn the practice as a whole, regardless of its profitability, because it "takes advantage of consumers who are already hard-pressed to pay their debts".
Proponents' stance
Proponents claim that cash advance loans provide a service that is not available from other sources. Many credit unions have attempted to offer similar products, but have been unable to do so without government subsidies or grants, a fact that many lenders and reports have highlighted. Furthermore, most of these programs offered by credit unions have ended due to the high default rates of borrowers.
A staff report released by the Federal Reserve Bank of New York concluded that payday loans should not be categorized as "predatory" since they may improve household welfare. "Defining and Detecting Predatory Lending" reports "if payday lenders raise household welfare by relaxing credit constraints, anti-predatory legislation may lower it." The author of the report, Donald P. Morgan, defined predatory lending as "a welfare reducing provision of credit." However, he also noted that loans are very expensive, and that they are likely to be made to under-educated households or households of uncertain income.
Thursday, December 18, 2008
Using Payday Loans for Vacation Expenses
Going on a vacation could be pleasurable and planning a much needed vacation can be exciting and can give you something to look forward to in the future. Depending on the vacation, it can be very important to ensure that you have a little extra cash on hand to take care of any miscellaneous expenses. Having extra money on hand can help your vacation go longer and smoother. For many, a great way to get extra money for a vacation is by using a payday loan to get the money now, and then pay it back after the vacation. If a vacation is what you need and are ready to get away, then use a payday loan to help you get the extra money you need to finance your trip.
How Much Can I Borrow?
When taking a vacation, one is always worried about how much they are going to need or spend in the course of vacation. Depending on where your destination is, this may vary. Most of your cash will go to eating out while you are on vacation and this could add up quickly, making your daily expenses go up more and more. Using a payday loan for extra expenses can help you cover costs and what you don't spend you can just bring back and use towards paying back your loan or other bills. How much you borrow can be up to you, most payday loans companies offer lending amounts from $100 to $1500, depending on your income. No matter how much you decide to borrow, you can be rest assured that a payday loan can help you have a more relaxing, stress free vacation. Apply for a payday loan today, you can even do it online.
Related Posts:
How to Use Payday Loans for Vacations
How Much Can I Borrow?
When taking a vacation, one is always worried about how much they are going to need or spend in the course of vacation. Depending on where your destination is, this may vary. Most of your cash will go to eating out while you are on vacation and this could add up quickly, making your daily expenses go up more and more. Using a payday loan for extra expenses can help you cover costs and what you don't spend you can just bring back and use towards paying back your loan or other bills. How much you borrow can be up to you, most payday loans companies offer lending amounts from $100 to $1500, depending on your income. No matter how much you decide to borrow, you can be rest assured that a payday loan can help you have a more relaxing, stress free vacation. Apply for a payday loan today, you can even do it online.
Related Posts:
How to Use Payday Loans for Vacations
How to Use Payday Loans for Vacations
Payday loans can be used for vacations effectively. Once you have planned a vacation and have received a payday loan to help cover your expenses, now is the time to put your vacation money to use. Depending on what type of traveler you are and where your destination is, putting your money to use the appropriate way is important.
Here are some of the common vacation expenses:
• Plane Ticket
• Accommodations
• Dinning
• Souvenirs
• Admission Costs- Shows/Theme Parks/Parks/Museums/Exhibits
Being able to have the money you need for these expenses can be very relaxing and make your vacation a very enjoyable one.
Payday Loans Travel Limitations!
The great thing about payday loans is that there are no limitations to where you can spend your money and how you spend it. Hey, just like it's your payday cash, you spend it as you wish! The best thing is that you receive the requested funds and from there you are able to put them to use anyway that you like. Having this option allows you to enjoy your trip and put your borrowed money to use on things that you want without any limitations. Using your payday loans wisely is important, but it is also important to use it how you deem fit; that way, you can enjoy your vacation. You can always apply for one even from where you are reading this right now!
Here are some of the common vacation expenses:
• Plane Ticket
• Accommodations
• Dinning
• Souvenirs
• Admission Costs- Shows/Theme Parks/Parks/Museums/Exhibits
Being able to have the money you need for these expenses can be very relaxing and make your vacation a very enjoyable one.
Payday Loans Travel Limitations!
The great thing about payday loans is that there are no limitations to where you can spend your money and how you spend it. Hey, just like it's your payday cash, you spend it as you wish! The best thing is that you receive the requested funds and from there you are able to put them to use anyway that you like. Having this option allows you to enjoy your trip and put your borrowed money to use on things that you want without any limitations. Using your payday loans wisely is important, but it is also important to use it how you deem fit; that way, you can enjoy your vacation. You can always apply for one even from where you are reading this right now!
Online Payday Loans
Payday loans are not deceptive in any way. Terms are listed up front; employees will explain them to customers and the repayment schedule - particularly the installment loans variation.
Payday loans can help you! If only you use it correctly! You can use it to save a lot of money in the long term or short term period! Don’t hesitate in getting a payday loan today! You will get professional advice and information on payday loans and also a perfect cash advance.
We know that payday loans has the perfect system and transaction process related to cash advice and payday loans. They will also find the perfect cash lender for you and hopefully give you the right solution to your financial difficulties. This site has the fastest and easiest way in processing the loans for everyone! All you have to do is submit the necessary requirements and fill up all the information and after this you are now
a step away in having your loans, isn’t it fast? Though this system is very common in the internet today, but only few are trusted. I would recommend that you try payday loans
So what are you waiting for? Visit the payday loans now and witness the real dominance of the cash advice over the other loan service providers in the internet, you will never regret this! Just go here now and surely all your questions will be answered. Go now and secure your payday loan on the hottest national cash advice, cash lender, payday loaners on the internet!
PS: Don't see this as a desperate measure to get you to buy, I will always ensure that I give you the best. If you will eventually get a payday loan, why not try the tested and trusted?
Payday loans can help you! If only you use it correctly! You can use it to save a lot of money in the long term or short term period! Don’t hesitate in getting a payday loan today! You will get professional advice and information on payday loans and also a perfect cash advance.
We know that payday loans has the perfect system and transaction process related to cash advice and payday loans. They will also find the perfect cash lender for you and hopefully give you the right solution to your financial difficulties. This site has the fastest and easiest way in processing the loans for everyone! All you have to do is submit the necessary requirements and fill up all the information and after this you are now
a step away in having your loans, isn’t it fast? Though this system is very common in the internet today, but only few are trusted. I would recommend that you try payday loans
So what are you waiting for? Visit the payday loans now and witness the real dominance of the cash advice over the other loan service providers in the internet, you will never regret this! Just go here now and surely all your questions will be answered. Go now and secure your payday loan on the hottest national cash advice, cash lender, payday loaners on the internet!
PS: Don't see this as a desperate measure to get you to buy, I will always ensure that I give you the best. If you will eventually get a payday loan, why not try the tested and trusted?
Instant Payday Loans - All You Need to Know
Instant payday loans are just the schemes you need. They offer the timely monetary help since they can be applied and approved of online almost instantaneously. What do you do if you are a salaried individual looking for a little cash to tide over the sticky financial situation just when the month has progressed a bit? Not to fret!
Instant payday loans are also highly advantageous for people with adverse credit history due to late payments or payment defaults, arrears, bankruptcies and county court judgments. The most attractive feature of the instant payday loans is that if approved the lenders deposit the loan amount in your checking account definitely within a period of 24 hours of receiving the application.
The application form for the instant payday loans requires certain details pertaining to the loan amount and the repayment period. The loan amount can be returned once the applicant receives the paycheck at the end of the month. Instant payday loans fall in the category of unsecured loans since the loans are approved without any collateral in the form of property or fixed asset. Because there is no need for any evaluation the lenders approve of such loans right away.
Since the credit status does not matter individuals with adverse credit can apply for the loan anytime from anyplace. The primary requirements for the instant payday loans is that the borrower needs to be 18 years of age and should be earning a stable income as salary for some years. The customer also needs to have a checking account in his name. The amount sanctioned by way of the loan depends on the monthly income of the applicant. Because it is an unsecured, very short term loan the instant payday loans often charge very high rates of interest. Hence such types of loans should be resorted to only if there is no other possibility of financial assistance. Normally people avail such loans for a period of two to four weeks or till the forthcoming paycheck. In case the loan repayment duration needs to be extended the borrower has to pay the interest.
The traditional method of applying for the loan consisted of visiting the loan counter in the company or establishing contact with the concerned personnel. To check your credit worthiness there was endless mailing or faxing of documents and records. These would be examined further and finally the loan would be approved. The entire process could take anywhere between two weeks to a month. However with the improved technology it is now possible to apply online for instant payday loans any time of the day during the year.
Before opting for an instant payday loan it is a good practice to compare the deals provided by several companies. Due to the fierce competition among the different companies there is a good chance of discovering an instant payday loan with a nominal interest. Examine the annual percentage interest charged and seek one with the lowest interest rate. This will save valuable cash. It is always better to opt for the loan from the residing state since then the company abides by the state laws. Later on if the need arises it is easier to sort out a discrepancy in the loan process.
Instant payday loans are also highly advantageous for people with adverse credit history due to late payments or payment defaults, arrears, bankruptcies and county court judgments. The most attractive feature of the instant payday loans is that if approved the lenders deposit the loan amount in your checking account definitely within a period of 24 hours of receiving the application.
The application form for the instant payday loans requires certain details pertaining to the loan amount and the repayment period. The loan amount can be returned once the applicant receives the paycheck at the end of the month. Instant payday loans fall in the category of unsecured loans since the loans are approved without any collateral in the form of property or fixed asset. Because there is no need for any evaluation the lenders approve of such loans right away.
Since the credit status does not matter individuals with adverse credit can apply for the loan anytime from anyplace. The primary requirements for the instant payday loans is that the borrower needs to be 18 years of age and should be earning a stable income as salary for some years. The customer also needs to have a checking account in his name. The amount sanctioned by way of the loan depends on the monthly income of the applicant. Because it is an unsecured, very short term loan the instant payday loans often charge very high rates of interest. Hence such types of loans should be resorted to only if there is no other possibility of financial assistance. Normally people avail such loans for a period of two to four weeks or till the forthcoming paycheck. In case the loan repayment duration needs to be extended the borrower has to pay the interest.
The traditional method of applying for the loan consisted of visiting the loan counter in the company or establishing contact with the concerned personnel. To check your credit worthiness there was endless mailing or faxing of documents and records. These would be examined further and finally the loan would be approved. The entire process could take anywhere between two weeks to a month. However with the improved technology it is now possible to apply online for instant payday loans any time of the day during the year.
Before opting for an instant payday loan it is a good practice to compare the deals provided by several companies. Due to the fierce competition among the different companies there is a good chance of discovering an instant payday loan with a nominal interest. Examine the annual percentage interest charged and seek one with the lowest interest rate. This will save valuable cash. It is always better to opt for the loan from the residing state since then the company abides by the state laws. Later on if the need arises it is easier to sort out a discrepancy in the loan process.
Payday Loans - Controversy and criticism
Payday lending is a controversial practice and faces both legal battles and public perception challenges in nearly every place where it is practiced. In the UK, David Drew MP signed an early day motion criticizing the payday lending market for high APRs and for locking customers into a "cycle of credit dependency"; it also noted the growth of Dollar Financial, a US-based payday lending company trading as Moneyshop in the UK, and called for a public inquiry into the growth of high cost lending in general and payday lending in particular.
[edit] Exploiting financial hardship for profit
Critics such as Consumers Union blame payday lenders for exploiting people's financial hardship for profit. They say lenders target the young and the poor, particularly those near military bases and in low-income communities. They also say that borrowers may not understand that the high interest rates are likely to trap them in a "debt-cycle," where they have to repeatedly renew the loan and pay associated fees every two weeks until they can finally save enough to pay off the principal and get out of debt. Critics also say that payday lending unfairly disadvantages the poor, compared to the middle class who pay at most 25% or so on their credit cards.
However, opponents of government regulation of payday loan businesses argue that some individuals that require the use of payday loans have already exhausted or ruined any other alternatives. Tom Lehman, an advocate of unfettered payday lending, said,
Payday lending services extend small amounts of uncollateralized credit to high-risk borrowers, and provide loans to poor households when other financial institutions will not. Throughout the past decade, this "democratization of credit" has made small loans available to mass sectors of the population, and particularly the poor, that would not have had access to credit of any kind in the past.
Lehman attacked proponents of increased regulation of the lending industry, arguing that, These allegations against the payday-lending industry are largely without merit, and generally reflect the views of "do-gooder" anticapitalist elites who abhor the "messy" and unplanned outcomes in low-income consumer finance markets. Rather than seeing payday lending practices as a creative extension of credit to poor households who may otherwise be without loans, these critics see it as yet another opportunity for government intervention in the name of "helping" the poor.
Lehman has in turn been criticized for presenting himself as an independent voice while taking money from the payday loan industry.
Aggressive advertising practices
Debt charity Credit Action made a complaint to the UK Office of Fair Trading (OFT) that payday lenders were placing adverts on social network website Facebook which broke advertising regulations. Their main complaint was that the APR was either not displayed at all or not displayed prominently enough, which is clearly required by UK advertising standards. [22] [23]
[edit] Aggressive collection practices
In US law, a payday lender can use only the same industry standard collection practices used to collect other debts.
In many cases, the borrower has written a post-dated check to the lender; if the borrower defaults, then this check will bounce. Some payday lenders have therefore threatened delinquent borrowers with criminal prosecution, for check fraud[24]. This practice is illegal in many jurisdictions.
[edit] Ignoring legal restrictions
Payday lenders have been known to ignore usury limits and charge higher amounts than they are entitled to by law. On May 30, 2008, the Illinois Department of Financial and Professional Regulation fined Global Payday Loan $234,000—the largest fine in Illinois history against a payday lender—for exceeding the $15.50 per $100 limit on charges for payday loans.[25] A customer, known only as J.M., borrowed $300 and repaid $360 ($13.50 more than the company was legally entitled to collect under the Illinois Payday Loan Reform Act), but the company was still sending her warnings that her account was 'seriously delinquent' and that her unpaid balance was $630.
[edit] Pricing structure of payday loans
Issuers of payday loans defend their higher interest rates by saying processing costs for payday loans do not differ much from other loans, including home mortgages.[citation needed] They argue that conventional interest rates for lower dollar amounts and shorter terms would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would generate only 38 cents of interest, which would fail to match loan processing costs.
Critics[who?] say payday lenders' processing costs are significantly lower than costs for mortgages and other traditional loans. Payday lenders usually look at recent pay-stubs, whereas larger-loan lenders do full credit checks and make a determination about the borrower's ability to pay back the loan.[citation needed]
[edit] Net profitability
A study by the FDIC Center for Financial Research[citation needed] found “operating costs lie in the range of advance fees” collected and that, after subtracting fixed operating costs and “unusually high rate of default losses,” payday loans “may not necessarily yield extraordinary profits.” Based on the annual reports of publicly traded payday loan companies, loan losses can average 15% or more of loan revenue. Underwriters of payday loans must also deal with people presenting fraudulent checks as security or making stop payments.
Critics concede that some borrowers may default on the loans, but point to the industry's pace of growth as an indication of its profitability. Consumer advocates condemn the practice as a whole, regardless of its profitability, because it "takes advantage of consumers who are already hard-pressed to pay their debts".[26]
[edit] Proponents' stance
Proponents claim that cash advance loans provide a service that is not available from other sources. Many credit unions have attempted to offer similar products, but have been unable to do so without government subsidies or grants, a fact that many lenders and reports have highlighted. Furthermore, most of these programs offered by credit unions have ended due to the high default rates of borrowers.[citation needed]
A staff report released by the Federal Reserve Bank of New York concluded that payday loans should not be categorized as "predatory" since they may improve household welfare.[27] "Defining and Detecting Predatory Lending" reports "if payday lenders raise household welfare by relaxing credit constraints, anti-predatory legislation may lower it." The author of the report, Donald P. Morgan, defined predatory lending as "a welfare reducing provision of credit." However, he also noted that loans are very expensive, and that they are likely to be made to under-educated households or households of uncertain income.
[edit] Exploiting financial hardship for profit
Critics such as Consumers Union blame payday lenders for exploiting people's financial hardship for profit. They say lenders target the young and the poor, particularly those near military bases and in low-income communities. They also say that borrowers may not understand that the high interest rates are likely to trap them in a "debt-cycle," where they have to repeatedly renew the loan and pay associated fees every two weeks until they can finally save enough to pay off the principal and get out of debt. Critics also say that payday lending unfairly disadvantages the poor, compared to the middle class who pay at most 25% or so on their credit cards.
However, opponents of government regulation of payday loan businesses argue that some individuals that require the use of payday loans have already exhausted or ruined any other alternatives. Tom Lehman, an advocate of unfettered payday lending, said,
Payday lending services extend small amounts of uncollateralized credit to high-risk borrowers, and provide loans to poor households when other financial institutions will not. Throughout the past decade, this "democratization of credit" has made small loans available to mass sectors of the population, and particularly the poor, that would not have had access to credit of any kind in the past.
Lehman attacked proponents of increased regulation of the lending industry, arguing that, These allegations against the payday-lending industry are largely without merit, and generally reflect the views of "do-gooder" anticapitalist elites who abhor the "messy" and unplanned outcomes in low-income consumer finance markets. Rather than seeing payday lending practices as a creative extension of credit to poor households who may otherwise be without loans, these critics see it as yet another opportunity for government intervention in the name of "helping" the poor.
Lehman has in turn been criticized for presenting himself as an independent voice while taking money from the payday loan industry.
Aggressive advertising practices
Debt charity Credit Action made a complaint to the UK Office of Fair Trading (OFT) that payday lenders were placing adverts on social network website Facebook which broke advertising regulations. Their main complaint was that the APR was either not displayed at all or not displayed prominently enough, which is clearly required by UK advertising standards. [22] [23]
[edit] Aggressive collection practices
In US law, a payday lender can use only the same industry standard collection practices used to collect other debts.
In many cases, the borrower has written a post-dated check to the lender; if the borrower defaults, then this check will bounce. Some payday lenders have therefore threatened delinquent borrowers with criminal prosecution, for check fraud[24]. This practice is illegal in many jurisdictions.
[edit] Ignoring legal restrictions
Payday lenders have been known to ignore usury limits and charge higher amounts than they are entitled to by law. On May 30, 2008, the Illinois Department of Financial and Professional Regulation fined Global Payday Loan $234,000—the largest fine in Illinois history against a payday lender—for exceeding the $15.50 per $100 limit on charges for payday loans.[25] A customer, known only as J.M., borrowed $300 and repaid $360 ($13.50 more than the company was legally entitled to collect under the Illinois Payday Loan Reform Act), but the company was still sending her warnings that her account was 'seriously delinquent' and that her unpaid balance was $630.
[edit] Pricing structure of payday loans
Issuers of payday loans defend their higher interest rates by saying processing costs for payday loans do not differ much from other loans, including home mortgages.[citation needed] They argue that conventional interest rates for lower dollar amounts and shorter terms would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would generate only 38 cents of interest, which would fail to match loan processing costs.
Critics[who?] say payday lenders' processing costs are significantly lower than costs for mortgages and other traditional loans. Payday lenders usually look at recent pay-stubs, whereas larger-loan lenders do full credit checks and make a determination about the borrower's ability to pay back the loan.[citation needed]
[edit] Net profitability
A study by the FDIC Center for Financial Research[citation needed] found “operating costs lie in the range of advance fees” collected and that, after subtracting fixed operating costs and “unusually high rate of default losses,” payday loans “may not necessarily yield extraordinary profits.” Based on the annual reports of publicly traded payday loan companies, loan losses can average 15% or more of loan revenue. Underwriters of payday loans must also deal with people presenting fraudulent checks as security or making stop payments.
Critics concede that some borrowers may default on the loans, but point to the industry's pace of growth as an indication of its profitability. Consumer advocates condemn the practice as a whole, regardless of its profitability, because it "takes advantage of consumers who are already hard-pressed to pay their debts".[26]
[edit] Proponents' stance
Proponents claim that cash advance loans provide a service that is not available from other sources. Many credit unions have attempted to offer similar products, but have been unable to do so without government subsidies or grants, a fact that many lenders and reports have highlighted. Furthermore, most of these programs offered by credit unions have ended due to the high default rates of borrowers.[citation needed]
A staff report released by the Federal Reserve Bank of New York concluded that payday loans should not be categorized as "predatory" since they may improve household welfare.[27] "Defining and Detecting Predatory Lending" reports "if payday lenders raise household welfare by relaxing credit constraints, anti-predatory legislation may lower it." The author of the report, Donald P. Morgan, defined predatory lending as "a welfare reducing provision of credit." However, he also noted that loans are very expensive, and that they are likely to be made to under-educated households or households of uncertain income.
What Is Payday Loans?
A payday loan (also called a paycheck advance or payday advance) is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card (see cash advance). Legislation regarding payday loans varies widely between different countries and, within the USA, between different states.
Retail lending
Borrowers visit a payday lenders and secure a small cash loan, with payment due in full at the borrower's next paycheck (usually a two week term). In the United States, finance charges on payday loans are typically in the range of 15 to 30 percent of the amount for the two-week period, which translates to rates ranging from 390 percent to 780 percent when expressed as an annual percentage rate (APR) The borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower doesn't repay the loan in person, the lender may process the check traditionally or through electronic withdrawal from the borrower's checking account.
If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay. For customers who cannot pay back the loan when due, members of the national trade association are required to offer an extended payment plan at no additional cost. In states like Washington, extended payment plans are required by state law.
Payday lenders require the borrower to bring one or more recent pay stubs to prove that they have a steady source of income. The borrower is also required to provide recent bank statements.[citation needed] Individual companies and franchises have their own underwriting criteria.
Internet lending
Online payday loans are marketed through e-mail, online search, paid ads, and referrals. Typically, a consumer fills out an online application form or faxes a completed application that requests personal information, bank account numbers, Social Security number and employer information. Borrowers fax copies of a check, a recent bank statement, and signed paperwork. The loan is direct-deposited into the consumer's checking account and loan payment or the finance charge is electronically withdrawn on the borrower's next payday.
Retail lending
Borrowers visit a payday lenders and secure a small cash loan, with payment due in full at the borrower's next paycheck (usually a two week term). In the United States, finance charges on payday loans are typically in the range of 15 to 30 percent of the amount for the two-week period, which translates to rates ranging from 390 percent to 780 percent when expressed as an annual percentage rate (APR) The borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower doesn't repay the loan in person, the lender may process the check traditionally or through electronic withdrawal from the borrower's checking account.
If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay. For customers who cannot pay back the loan when due, members of the national trade association are required to offer an extended payment plan at no additional cost. In states like Washington, extended payment plans are required by state law.
Payday lenders require the borrower to bring one or more recent pay stubs to prove that they have a steady source of income. The borrower is also required to provide recent bank statements.[citation needed] Individual companies and franchises have their own underwriting criteria.
Internet lending
Online payday loans are marketed through e-mail, online search, paid ads, and referrals. Typically, a consumer fills out an online application form or faxes a completed application that requests personal information, bank account numbers, Social Security number and employer information. Borrowers fax copies of a check, a recent bank statement, and signed paperwork. The loan is direct-deposited into the consumer's checking account and loan payment or the finance charge is electronically withdrawn on the borrower's next payday.
What Is Payday Loans?
A payday loan (also called a paycheck advance or payday advance) is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card (see cash advance). Legislation regarding payday loans varies widely between different countries and, within the USA, between different states.
Retail lending
Borrowers visit a payday lenders and secure a small cash loan, with payment due in full at the borrower's next paycheck (usually a two week term). In the United States, finance charges on payday loans are typically in the range of 15 to 30 percent of the amount for the two-week period, which translates to rates ranging from 390 percent to 780 percent when expressed as an annual percentage rate (APR) The borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower doesn't repay the loan in person, the lender may process the check traditionally or through electronic withdrawal from the borrower's checking account.
If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay. For customers who cannot pay back the loan when due, members of the national trade association are required to offer an extended payment plan at no additional cost. In states like Washington, extended payment plans are required by state law.
Payday lenders require the borrower to bring one or more recent pay stubs to prove that they have a steady source of income. The borrower is also required to provide recent bank statements.[citation needed] Individual companies and franchises have their own underwriting criteria.
Internet lending
Online payday loans are marketed through e-mail, online search, paid ads, and referrals. Typically, a consumer fills out an online application form or faxes a completed application that requests personal information, bank account numbers, Social Security number and employer information. Borrowers fax copies of a check, a recent bank statement, and signed paperwork. The loan is direct-deposited into the consumer's checking account and loan payment or the finance charge is electronically withdrawn on the borrower's next payday.
Retail lending
Borrowers visit a payday lenders and secure a small cash loan, with payment due in full at the borrower's next paycheck (usually a two week term). In the United States, finance charges on payday loans are typically in the range of 15 to 30 percent of the amount for the two-week period, which translates to rates ranging from 390 percent to 780 percent when expressed as an annual percentage rate (APR) The borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower doesn't repay the loan in person, the lender may process the check traditionally or through electronic withdrawal from the borrower's checking account.
If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees and/or an increased interest rate as a result of the failure to pay. For customers who cannot pay back the loan when due, members of the national trade association are required to offer an extended payment plan at no additional cost. In states like Washington, extended payment plans are required by state law.
Payday lenders require the borrower to bring one or more recent pay stubs to prove that they have a steady source of income. The borrower is also required to provide recent bank statements.[citation needed] Individual companies and franchises have their own underwriting criteria.
Internet lending
Online payday loans are marketed through e-mail, online search, paid ads, and referrals. Typically, a consumer fills out an online application form or faxes a completed application that requests personal information, bank account numbers, Social Security number and employer information. Borrowers fax copies of a check, a recent bank statement, and signed paperwork. The loan is direct-deposited into the consumer's checking account and loan payment or the finance charge is electronically withdrawn on the borrower's next payday.
Looking For Fast Cash? Get Quick Loans With Paycheck Loans
Have you ever had a credit provider tell you that he can only give you payday loans? If you did, it was because of your bad credit history. Many financial institutions will charge you a higher interest rate because of the perceived risks associated with bad credit. Bad credit can be deceptive, hence payday loans.
Who Should Get Payday Loans?
Payday loans, including cash advance loans and high risk loans are for individuals with credit history troubles. When they encounter financial troubles with unexpected expenses, they often have no other recourse but to take out a payday loan.
Benefits of Payday Loans
• It can help the borrower repair his credit as long as he makes the necessary payments on time and repay his loan in full.
• If he has proven that he can handle his financial responsibilities, he can get better loan terms in the future.
• Payday loans are obtained easily. In fact, even if there is no collateral involved he can still be approved for this type of loan.
• Borrowers who need fast cash can get the amount they need quickly. Be sure to read the fine print carefully and thoroughly.
Disadvantages of Payday Loans
• Companies sometimes charge high interest rates for payday loans.
• Credit establishments require strict compliance to monthly payments.
• Read the fine print. Make sure that you know the terms and conditions of any loan before signing.
Payday loans offer people with bad credit a second chance. Take time to make sure that you understand the terms and conditions of the loan. Make timely payments and you are well on your way to establishing your good credit.
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