Basic Facts About Payday Loans

Most people believe that they are perfectly aware of what payday loans are and some of them even get into the whole payday loans thing thinking that they are in possession of all the most important facts. However, for most people, this is just not true. They know that they can get the money without having to provide their credit rating and that they have to repay the money as soon as possible. And while both of these facts are true, there is still so much more to payday loans that one needs to at least be aware of those facts before they indulge in borrowing money this way.

Are payday loans available in all states?

First of all, you need to understand that while payday loans have been determined illegal in certain states, such as Arizona, Georgia or New York, it is still possible to get payday loans even If you are a resident of one of those states. This is done through certain partnerships with resident banks and payday lenders from other states where this is legal. However, you need to remember that there are certain limitations to taking out payday advance in these states. In short, no one is going to prosecute you if you take out payday loans in those states.

Interest rates

You should also remember that the interest rates on payday loans are high. If you were to take out a cash advance and wait an entire year to pay it back, you would be looking at an accumulated interest rate of over 1386%. The good thing is that payday loans are in majority of cases repaid come the next paycheck, protecting both you and the lender. You should also be aware of the fact that while some states have limited the interest rates for payday loans, there are still states that do not regulate them and where interest rates can be extremely high.

Steady source of income

When we said that payday loans require no credit check, we were telling the truth, but you will still have to provide proof that you have a steady source of income and that you will have the money you will need to pay back the money you borrowed. The good news is that this does not even have to be a paycheck. You can take out payday loans based on your social security monthly check and other forms of income in the broadest sense of the word.

The amount to borrow

Keep in mind that the money you can borrow through payday loans is limited. The lenders know that it is relatively likely that their loan is going to default and that is why they need to minimize their risks. One of the ways in which they have done this is by limiting the loans to a sum between $100 and $1000. You might still be able to negotiate a bigger loan with your lender of choice, but keep in mind that you will need to have a longstanding relationship with them before they will even start thinking about a bigger loan.