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What Exactly Is A Payday Loan?

It is a loan to cover a short amount of time. Typically they are promoted as a means to meet unforeseen expenses that occur a few days prior to having money come available. Typically when you are strapped for cash and awaiting payday.

Unlike standard individual loans they are arranged over days as opposed to years, so can be a stop gap till your regular income shows up.

Just how much can you obtain?

Typically approximately $1000, although some loan providers restrict the size of the first loan they will offer. Loan durations start at less than a week and sometimes go to months. Some for example, offer borrowing over 5 days to 5 months, while various other loan providers begin at just a day and the optimum differs throughout the month.

There are not usually early payment charges, however there are charges for establishing the loan, as well as interest, which is typically computed daily.

Are they pricey?

Yes, however not always more so than standard options– as long as you pay them off as expected.

Obtaining $500 for 10 days suggests you should pay back something around $530, which is likely to be less than your bank charges for other forms of short term lending. A personal loan could be much better, or an interest-free credit card, however these are certainly not always options.

Nevertheless, charges rapidly mount if you miss the payment or decide to extend or roll over the loan. What began as a little loan can proliferate as soon as additional interest and fees start to be used.

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    Important!

    Short term loans like payday loans attract higher interest rates. This site contains general information to allow you to understand the pros and cons of payday loans. Any information on this site is not to be construed as financial advice. Each person needs to consult professional advice before borrowing money to ensure their personal circumstances are taken fully into account.