Sometimes, people need a few extra bucks to get them through the week. For situations like that, pay day loans come in very handy. Generally, the loan process involves a lender providing a short term, unsecured loan to be repaid at the borrower’s next payday. Short term loans, mainly cash loans, can come in extremely handy for a variety of different reasons.
To prevent against unreasonable and excessive rates of interest, also known as usury, some jurisdictions limit the annual percentage rate that any lender can charge. That includes pay day loans lenders. On that note, in accordance with laws of the United States, a payday lender can use only the same industry standard collection practices to collect other debts. Payday loan lenders are not allowed to use the criminal process to collect their debts either.
Obviously, short term loans are not intended to meet long term financial needs. Short term loans generally have low interest rates, and are required to be paid back within a couple of weeks at most. In addition, sometimes, people can even get online payday loans, which can save them the time of having to go into a physical institution and apply for a loan.
Overall, short term loans, like pay day loans, are intended to provide people with a little bit of extra cash to get them through the week. For instance, a pay day loan might be used by someone who needs to pay an unexpected bill but won’t receive a paycheck for a few weeks. In short, payday loans are generally a security blanket for people.