In regards to payday loans, there is first the traditional retail lending side. In this kind of a payday loan the borrower visits a payday loan store to get a cash advance. The borrower will have to pay this in full on the next pay day. The next payday will usually be two weeks or so away. Research has proved that it is usually towards the mid of the month that people are most likely to opt for payday loans. In the US, finance charges are typically anywhere between 15 and 30 percent of the total amount borrowed for a period of two weeks.
What does the borrower need to do to get this mid-month bounty of fast cash? Well, he needs to write out a post-dated check in the name of the borrower for the entire amount. This includes the amount plus the loan amount fees. Then on the stipulated payday the borrower needs to go back to the store and repay the loan in person. In case the borrower does not do so then the lender has the right to process the check manually or by electronic withdrawal from the borrower's bank account.
Now one may wonder what happens if the funds are not available in the borrower's account. If the borrower's account doesn't have enough funds to cover the charges then he is faced with a bounced check fee from the bank in addition to of course the cost of the payday loan. The payday loan may also go ahead and incur further charges.
Some of the states offer an extended payment plan at no additional cost. Hence in a state like Washington if the customer cannot repay the loan on the due date then as a member of the NTA the retailer has to offer enrollment in an extended payment plan. And this comes at no extra cost to the borrower. Whew! A sigh of relief finally for the borrower.
Payday lenders of course are no way going to be beaten out of business. The borrower is required to get them the last few months pay stubs or salary statements. This ensures that they have a reliable source of income in order to go ahead and enjoy the benefits of fast cash. The borrower also has to produce a recent bank statement.
Internet lending and payday loans
The internet has opened up a different avenue of marketing cash advances via e-mails, online searches and paid ads. All a consumer needs to do to acquire this fast cash is to fill out an online form and submit the completed application. However, an applications for an online payday loan requires personal details such as a social security number, bank account numbers and employment info. The borrower also needs to send a copy of a recent bank statement, voided check and signed paperwork. Once this is done the advance cash is directly moved to one's account and the loan payment amount is automatically withdrawn on the borrower's payday without him having to visit the lender.
