Anyone who is considering a payday loan to help pay for emergency expenses will have questions about how the process of borrowing and repaying the loan works. These six common questions about payday loans can help people determine whether these unique loans are right for them.
What are the requirements for qualifying for a payday loan?
Requirements may differ according to the lender, but there are basic requirements that are the same for every lender.
The borrower must meet the following criteria:
– 18 years old
– Canadian citizen
– Valid bank account
– Verifiable income
Information about these requirements will be gathered during the initial application. People who meet these qualifications may need to provide more detailed information for verification. Paycheck stubs and bank account numbers must be submitted before the loan can be processed.
Most lenders do not require a credit check. This makes a payday loan an ideal choice for people who have had credit problems in the past. The borrower’s income acts as collateral on the loan to prevent the need for a thorough credit check.
How much can be borrowed?
The exact amount that can be borrowed depends on the income of the borrower. Loans typically range from $100 to $1,000. It is recommended that borrowers choose the lowest amount needed to keep the payday loan easy to manage.
What are the fees associated with payday loans?
Each lender sets a fee that will be added to the total amount of the loan. This is a one-time fee that increases the total amount to be paid back. There is no interest rate applied to the beginning balance of the loan.
However, people who repay their payday loan after the due date could face penalties. Review the terms of the loan to determine the fees associated with failing to repay the loan on time.
How is the money transferred?
Money is transferred directly into the borrower’s bank account. This makes it easy for borrowers to access their funds as soon as the loan has been process. Money can then be withdrawn from the bank for any use.
How long does it take to transfer the funds?
The fact that the funds are deposited directly into a bank account means that the transfer tends to be very quick. Some people are able to access their money in as little as one business day. Most people receive their money within 48 hours. The quickness of the transfer with a payday loan makes it a great choice for emergency expenses that just cannot wait.
What happens if someone cannot pay back their payday loan?
The most important thing to do after realizing that a payday loan cannot be repaid by the due date is to contact the lender immediately. Keeping the lender informed about the situation could keep penalties minimal. There will probably be penalties assessed for each pay period that the loan is late. Lenders may be willing to make payment arrangements to make the loan more manageable.