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How Payday Loans Can Help You Get Through Rough Times

By Ruth Racey
Published: Sunday, September 18th, 2011

Now that virtually every commodity is for sale, with the exception of the air that we breathe, some people have to find a way to live—even though it means having to survive from paycheck to paycheck. This is not even the worst case scenario, so people in this situation still have much to thank for. But if indeed you are one of the 3 millions Americans who need financial assistance to tide them over until the end of the month, then you are reading the right thing.

There are many types of loans available to consumers nowadays. Credit cards are one popular type of loan wherein a bank issues a card in which you can charge your purchases and then pay it later at the end of the month. Home and car loans are another example. Individual money lenders offer secured loans. But one type of loan is increasing in popularity among middle-wage earners: payday loans.

Payday loans are special loans given to people who have to pay for daily expenses but has no available cash to spend. Typically, these loans are paid off monthly like a regular bill, and it does make a difference in the life of people whose only source of income is their monthly pay. It works the same way as credit cards do, although the loan is given in cash and no card is issued. Payday loans have a similarly high interest rate, though. The only positive aspect of applying for payday loans is when you need a no-fuss source of credit.

Because this type of loan is secured by a postdated check from the borrower, the lender is assured of payment at the end of the month. That is why most payday lenders give out loans more easily than other types of lenders. And the postdated check also carried the percentage of interest rate. So if you borrowed $500 for a 2-week period and the loan officer says that the interest rate is 25% of the amount, then you would have to issue a $625 postdated check.

That might be a hefty sum. To think, that was just a 2-week period of repayment. For some people, a payday loan is an option for emergency situations, not an everyday choice of loan. It does make sense since application for this loan does not entail rigorous screening before getting approved. All you need to do is to look for a payday loan officer, present pay stubs as a proof of income, state the amount of loan you need and wait if the loan officer approves your desired loan when checked against your monthly income.

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