A payday loan is small credit given by some lenders to the borrowers. The lenders give these payday loans only to those borrowers who have a job. Payday loans are taken by borrowers to meet immediate expenses like medical emergencies. The processing time of these loans is very fast and one can get a loan within 24 hours.
In order to apply for a payday loan the borrower must fulfill certain eligibility criteria. The borrower must be a citizen of legal age with respect to his country rules; he must be having legitimate address and identity proofs and he must have a job. In the US these loans are given to only those borrowers who have a minimum steady income of $1000 per month. Eligible borrowers can apply for these loans either in person at the lender’s office or online. Applying online is much faster as less paperwork is involved.
After the application reaches the lender he verifies the identity of the person and other details regarding his job. If the lender is satisfied then he will approve the loan and money is transferred directly to the borrower’s bank account. The usual time of involved in applying, verification and approval is about 24 hours. The time delay takes during the transfer of money.
There is a loan limit that states that a person can borrow only amounts in the range of $500 to $1500. The usual loan repayment period is about two weeks but can be extended in some cases. The only con in a payday loan is the high interest rate. The usual interest rate is in the range of 15% to 30%. This leads to a very high APR (annual percentage rate). For example for a $100 loan with 15% interest rate the APR is 610%. As the interest rate is very high hence borrowers are advised to repay the payday loans as quickly as possible or else the gross amount will exceed the principal.