Features Of A Payday Loan That Everyone Must Know And Understand

by Money in Minutes Marketing

People generally think of taking loans only for big reasons and purposes, like medical emergencies, investing in business, buying a new house or a car, etc. But there are times when one needs small sums of money to meet some immediate financial needs, like going on a vacation, making some payments, etc. If often happens that you realize that you have to pay your electricity bill, but do not have the funds for the same. You know you would be receiving your salary soon and would have the funds then, but if the bill is not paid immediately, you may end up losing power in your house. For such a short term and immediate cash needs, there is a very good option of taking emergency cash loans, which are also more popularly known as payday loans.

These short term cash loans are available for small amounts like $500 or even less. The process for getting these loans sanctioned is very easy, simple and quick. Thus, if you have a regular source of income and are sure that you would be able to pay back your payday loan on time, then taking out these loans for meeting your short term and immediate need of funds is a sound decision. However, before one takes any loan, it is very important that one gathers all the information about the terms, conditions and features of that loan.

Thus, before applying for a payday loan, it is very important that one should know about all the important features of this type of loan. There are three most important and prominent features of these loans, which anyone and everyone planning to apply for this loan, should be aware of. These three features have been discussed below in detail:

Short Term Cash Loans

The first and the most important thing that everyone should understand about these loans is that they are available for a very short period of time. If you have a need for funds for a period longer than one month or more, then payday cash loans would be a suitable option for you. The term of these loans lasts from one payday to the next payday. If you do not think that you would be able repay the loan with your upcoming pay, then you should not apply for these loans.

Small Financial Loans

Another important feature of these loans is that under payday loans, the amount sanctioned are very small. Most of the banks and other financial institutions offering these loans offer a maximum amount of $500 as payday loans. Thus, if you require funds to a higher tune, then again this scheme of loans will not be able to serve your purpose. The idea behind these payday cash loans is to help individuals in meeting their short term emergencies, which generally arise towards the end of the month when the entire salary for the month has exhausted and there is still a little time left before the next salary gets credited to their account. These loans are supposed to help individuals in tiding over this time gap when the financial need arises and the time when the salary payment is received and the fund crunch gets over.

Check For The Full Amount To Be Given At The Time Of Sanctioning

At the time of getting the loan sanctioned, the borrower is expected to provide the bank with a cheque for the full amount of the loan. This cheque gives the lender complete access to the account of the borrower, and on the date, when the repayment of the loan becomes due, the lender has complete authority to deposit this cheque and recover its balance from the borrower. When taking any loan, the banks and other financial institution ask the borrower to provide them with some sort of collateral security, like their property papers, etc. In the case of these same day payday loans, this cheque acts like that guarantee to the lending authority. Since the cheque needs to be drawn on the bank account in which the borrower receives his or her salary, therefore, the bank can be sure that on the due date, there will be ample of funds available in the bank account to honor the cheque.