When an urgent need for cash happens during an emergency, the first thing we consider is the source of the fund that is readily available. We start thinking about our close relatives and family members, friends or business associates who could probably come to our aid. When this is not possible, we review our banking relationships and take a look at our credit standing. Does our credit score merit the approval of another loan with the bank or financial institution that we have been dealing with? But, what if our credit score is not acceptable to these creditors? This situation then adds up to the current urgent problem we have on hand. In the United States, United Kingdom and Canada, citizens of these countries are enjoying the privilege of having lenders of payday loans to run to for assistance. While the processing of payday loans for US, UK and Canadians citizens is at a faster pace because of the online procedures in processing their payday loans, other countries are following the trail to serve their people under the same payday loan financing scheme.
How payday loan works for these people?
Normally, only those who are in dire financial needs are resorting to this kind of personal loan. In the first place, payday loans bear high interests because of their short term and uncollateralized features. They come in small amounts of $300 up to a maximum of $1500 in some cases. They were designed to meet emergency expenses in between paydays and are payable all at once on the next salary day or after a month. There are requirements that must be met before such a cash advance is approved. One vital document is a proof of employment. One must accomplish a simplified form and based on the information supplied, the cash it transferred to the customer’s bank account. Some lenders claim that they can go through the entire process in an hour at the most.
In the UK there is no ceiling on the interest rates of payday loans but lenders are required to report the rates they are charging their customers. However, in the US, there are States that ban this type of personal loan while others have put a cap on the interest charges they can collect to control the collection of excessive interest and fees from their customers. While in Canada, their citizens are protected from usurious practices by declaring that interest charges above 60% are criminal in nature.
Why resort to payday loans?
Although the interest rate is very high when compared with traditional lending facilities, people that need immediate cash to settle a bill or meet an emergency are unwillingly drawn to it as a last resort. They matched the high cost of acquiring the loan to the cost of not being able to settle the urgent payable or solve the present problem. They reason out that the cost of money they pay is worth the problem solved. They don’t mind to bother themselves that they could get into a debt cycle if they fail to pay the cash advance on time. A renewal of the old loan is most likely to happen; unless of course they could put their finances in order and generate the needed funds to bail them out in due time.
Many other countries have been adopting the business of extending such practices though at variance with that of the US, UK and Canada regarding the rules of the State to govern their operations. But just the same, the idea in the creation of the fast online loan remains constant regardless of the place of application. And that is to meet a financial emergency when it arises.