When looking at a payday loan, the interest rate is one of the first things to be considered. The cash payday loans can carry interest rates as low as 10 percent. Rates can even go as a high as 900 percent. The interest is determined by how long the funds will be needed. The longer the repayment period, the higher the interest rates can become.
Defaulting on a payday loan
Regardless of whether or not the funds are available in an account, the debit transaction is scheduled. If the funds are not available, the loan may be considered default in status. When a person defaults on a payday loan, collection calls are one of the methods used to recover the funds. In addition to collection methods allowed by law, the lender can pursue legal action in a small claims court where the person can be held responsible for the loan, legal fees and collection costs.
Receiving the payday loans
Some companies specialize in cash payday loans. My Canada Payday, for example, offers payday loans in cash at their Surrey office, but if you are in Ontario or Saskatchewan you can only borrow online. The person may be provided cash immediately upon being approved for a loan. The person has to apply for the cash advance loan at a physical store location. These locations usually offer same day processing and approval.
Funds from a loan are rarely dispensed in the form of a check. The only time a check is used in the process is to secure a hold for funds to be drafted at a designated date. Companies prefer to electronically deposit funding directly onto a debit card or into a checking account.
Some lenders provide a prepaid debit card to provide easy access to funds. The person can easily swipe a card and have the funds available to them. The cards can be accessed at most ATM locations and can be used indefinitely once activated. This option is provided as a convenient method for people to manage their loan long- term and prevents the person from overdrafting.
Some lenders do no offer the loan in this type of manner. The money can be electronically deposited into a person’s account once the application is approved. The most common method for dispensing cash for payday loans is the savings and checking card. Lenders prefer to have access to the account information used to process paychecks.
Before taking out a payday loan, it is best to carefully review the terms of the agreement. Penalties and interests can quickly accumulate. Debits made to overdrawn accounts can result in bank fees and other fees assessed by the lender. Because it is so easy for a person to fall into a payday loan cycle, individuals should think carefully about the amount of money being borrowed, the repayment terms, and the interest rates.
