If you have saved for the rainy day, you can tide over an unexpected financial crunch. However, if you are not prepared to deal with a cash crunch that tends to cripple you financially, you can face a lot of unpleasant moments.
Thanks to payday lenders that ensure that you can tide over such a situation with ease and within a short time span. So, how do these money lenders bail you out? This is what has been explained in the paragraphs that follow. Also, the finer aspects of payday lending have been discussed.
Nuances of payday lending
There are several payday loan lenders operating in the market and they must possess valid license and also have to comply with the norms laid down as per the Australian Securities and Investment Commission (ASIC). So, prior to signing up or dealing with any such lender just make sure that the firm has a valid license and that it has complied with the regulations of the governing body.
Once you apply for the loan (assuming that you are doing so online), there is an application form that you will be required to fill. This form will ask you for information required for the loan approval.
Information includes your name, age, gender, employment status, loan amount you are applying for, and bank account details. As such, when you provide bank account number, make sure you have adequate cash so that the loan repayment amount can be deducted. Aside from that you will be required to provide copies of bills.
Depending on whether you have dealt with the payday lender earlier or not will determine whether or not any other documents will be necessary when you apply for the loan.
As per norms, you will be required to repay the loan between 16 days and a year. The mode of repayment will include a “direct debit” from your account (the bank account that you have mentioned), or you can repay the loan from your paycheck. For individuals that have never dealt with
How to payday loans bail you out?
How can payday loans bail you out from a financial crunch? Availing these loans is simple and you can expect your cash to get deposited into your bank account within a day or two. And for this reason these loans are usually referred to as quick loans.
Unlike other types of loans that take a lot of time for approval and subsequent disbursement, these loans are comparatively hassle-free. Moreover, in case of other types of money lending, you might be asked to use collateral as security in the event you have a ruined credit history or the lender finds that his investment will be at stake if he deals with you.
Most of the lenders will make the loan amount available within 2 business working days and once you have the money at your disposal, you can use it to overcome the financial crunch you are going through.
Fees for payday loans
The fees that you pay will vary because the loan amount varies from one individual to another. However, no payday money lender can formulate its own rules other than the norms mentioned below-
- Account keeping fee (monthly) that cannot exceed 4% of the loan amount
- Government charge/fee
- Enforcement expenses
- Default fees
- One-off establishment fee 20% of loan amount
The payday lenders are prohibited from charging interest on the loan amount. So, this is advantageous as you don’t have to fall prey to the so called “loan sharks” that operate in this market and charge exorbitant rates of interest that can force you into a vicious cycle of debt.