What is a Payday Loan?

A payloan is when a lender gives the borrower a short term loan without any securities until the payday of the lender when they would be expected to repay the loan. This is especially of advantage to people who face unexpected expenses. In some cases late payments could lead to penalties and result in wastage of money. This can be avoided by taking a small payloan for the time being that can be repaid after you get your salary.

Getting a payloan is easy. All you need is a checking account and at least two previous paychecks. However it is not possible to get a second payloan from the same lender until the first one has been paid off. The amount given depends on your income and your current financial status. Such loans usually have a comparatively high interest rate but this is minimized by the major advantage that no security is needed. Therefore it is important to consider all angles of the loan before applying for one so that you get a deal that best suits your needs.

Such payloans are generally repaid when next paycheck comes in. However if you are unable to do so, only the finance fee may be paid on the date when the loan matures. Some people even opt to pay a fraction of the original principle before the stipulated day when the loan matures. The procedure for getting a payloan is also very easy. All you have to do is fill up a form that is usually available online and have it approved. This process might take as less as 30 minutes.

Once the form is approved, an email will be sent to you and the money is automatically credited to your account. Also you can choose to have the amount automatically debited from your account when you get your paycheck.

In order to qualify for a payloan, one has to satisfy certain basic rules. The borrower should be at least 18 years of age and should have a regular job that pays enough to cover the loan. They are required to show proof of at least two previous paychecks and must also own a checking account. In fact any type of account in which money can be deposited directly can be used. In certain countries, the borrower is required to make at least a certain minimum amount of money. In countries like Canada, this amount is about $1000 per month.

An important requirement while applying for a payloan is proof of employment. The easiest way to do this is to fax the respective documents to the loan office. However some companies even accept screen shots of your online banking account that clearly indicates your employers making deposits of your paychecks as proof of employment. Otherwise, one can even mail or fax them the online banking statement. Once these documents are verified, the money gets automatically credited to your account for you to spend as you please.

Payday loans are regulated provincially. Any further questions should be directed to your local Consumer Protection Branch.

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