Also called a cash advance or a paycheck advance, a payday loan is a loan that is intended to cater for a borrower's expenses until they get their next months pay. No credit check payday loans typically take care of daily expenses like paying for electricity bills telephone bills, and some taxes.
Legislation surrounding payday loans vary from state to state, but generally, lenders do not check for an individual's credit worthiness hence the terms "no credit". The loan application is a simple and can be done online. The lender requires employment details, personal details and the bank account of the borrower. The application is reviewed, verified and if appropriate, the money is deposited into the borrower's account. Payday loans are usually not more than £1000.00.
Interest for payday loans can be high because it is a high risk loan. On top of the loan and the interest, one is supposed to pay for the service charges. The repayment period usually coincides with the next paycheck. No credit paycheck loan lenders are very strict when it comes to repayment. When someone does not pay by the stipulated date, the lender has the right to deduct the money that is owed straight from the borrower's bank account. One has the leeway to apply and extended the payment duration of the payday loan.
In the US, the borrower writes a check that is post dated, this check has all the money owed, ie. The loan itself, interest and service charges. If this check bounces, the borrower will have to pay a bounced check fee and the loan itself might incur more charges. Most states also have usury laws, these are laws that govern interest on payday loans.
If a countries does have usury laws and legislation surrounding payday loans, borrowers of payday loans are susceptible to loans being rolled over.