If you are in a financial predicament and there is urgency for you to get your hands on some quick cash, applying for small loans is perhaps your best solution. There are financial entities today that specialize in providing small loans to individuals. If you are a working individual, payday loans (aka payday advance loan, salary advance loan, short term or cash advance loan.) is the your resolve to the financial problem you may be facing. Payday loan is defined as a small, short term and unsecured loan. Even if the type of loan implies “payday” the loan itself does not necessarily have to be linked to the borrower’s payday. Most large companies today however provide payday loan to their employees as a form of a benefit. Because it’s an employee’s benefit, this type is a much better version of the standard payday loan for the simple reason that the interest rates are waived by the employer. Generally, standard payday loans are short-term loans and would usually have these three traits namely; the loans are really small and would usually not exceed the month’s pay of the borrower. Secondly, payments are usually made on the next payday schedule (hence the term payday loan). Third and most important of all is that the borrower is required to give the lender access to the borrower’s checking account, ATM account or to simply issue the lender a postdated check for the total amount of the loan.
These types of loans vary in features. For instance, these loans are sometimes paid in full or in lump sum as soon as the payment due date is reached or it can also be amortized through several payment. However it must be understood that being a short term loan, the amortization should only take about two to three months. There is also what is known as interest only payments wherein the loan is automatically renewed as long as you keep on paying the interest on its required due date. These loans are sometimes referred to as renewal or rollover over loans and are usually provided by the company the borrower works for or from a small loan company. A credit card cash advance feature is also considered to be categorized as a type of payday loan.
Many financial analyst claims that short term loan companies are the type of lenders you should avoid. Many of them claim that borrowing money from short term loan companies can put the individual up to his neck in debts because the people who avail of this kind of loan are the most vulnerable because it is the easiest to access. However there is really no solid proof to support the claim. Banking laws and other kinds of finance laws enacted are the set of legal rules that protects short term lending companies and their borrowers. Since this is the easiest loan to get, government laws put a ceiling on the loan amount. These laws guarantee affordable rates of interest and at the same time protect loan clients from borrowing amounts way above their pay grade.