What is a payday loan?
A payday loan, widely known as cash advances are small, short-term unsecured loans. Payday loans are different from other financing options such as personal loans, mortgages, or credit cards. The borrowers are expected to repay payday loans all at once. Though payday loans can be availed instantly and have easy eligibility criteria, they lack in affordability.
While availing a payday loan, your loan amount is decided by the lender on the basis of your income. The lenders may issue you a cheque or make an electronic deposit into your bank account. You are required to pay a fee for the loan based on the amount you are borrowing. Since the lender approves the payday loan without any credit check, the interest rate is typically higher in most cases.
Interest rate on payday loans
Payday lenders charge borrowers extremely high levels of interest that can range up to 500% in annual percentage yield (APR). The laws regarding instant payday loans are different in different countries. Some jurisdictions limit the annual percentage rate (APR) that any payday lenders can charge. This ensures that the borrowers do not have to bear unreasonable and excessive rates of interest. Some jurisdictions outlaw payday lending, whereas some have very few restrictions on payday lenders.
In India, it is possible to avail quick payday loans with the help of some leading Non-Banking Financial Institutions. While applying for a payday loan online in India, the applicant has to provide the following details:
- Age Proof
- Proof of active bank account
- Proof of income
- A valid phone number
- Pan card number
Obtaining a payday loan
Payday loans can be availed easily through a hassle-free online application process. Once the application is approved, the loan amount is disbursed within minutes. However, it is recommended that you check your repayment capacity before availing a payday loan.
You would be required to repay the loan on your next payday. However, you can also opt to “roll-over” your payday loan. When you roll-over your payday loan, you essentially start a new loan. In order to get this extension, you will have to pay the loan fee again.
Payday loans with no credit check are a good solution if you wish to avail a small amount of money. It is equally important to ensure that you repay the payday loans on time. If you fail to do so, the fees can add up quickly and you might eventually end up repaying a lot more than you borrowed in the first place. While availing a payday loan, it is also very essential that you read the terms and conditions mentioned in the agreement carefully. Ensure that you have a clear understanding of the fees. Most lenders decide their fees depending upon the borrowed loan amount. Also, you should make a note of the repayment date. Some lenders will automatically roll-over your loan unless you tell them you are planning to make a payment.
Now that you know the details of a payday loan, you can consider availing it to fulfill your instant fund requirement. However, since payday loans have extremely high personal loan interest rates associated with them, you can consider other economical alternatives such as a personal loan. Personal loans are multipurpose unsecured loans that have comparatively lower interest rates associated with them. A Bajaj Finserv Personal loan offers attractive interest rate and other lucrative features such as instant approval and quick disbursal of the loan amount. With the help of an online personal loan EMI calculator, you can calculate the monthly installments beforehand. This can help you plan your monthly budget wisely.
Also know about you can get a personal loan with low CIBIL score.
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