Payday Loans

The Secret Behind Fast Payday Loans

Fast payday loans look very attractive because of the kind of features they have to offer. But, everything that looks attractive does not always necessarily make the right choice for you. On the contrary, it has always been found that things that look too lucrative to be true often involve a dirty secret behind it. The similar thing holds true for these fast cash advances also. The internet, newspapers, and magazines are all overloaded with advertisements that tell you how you can benefit by these small short-term loans. What they do not tell you is that these loans are extremely expensive and have been designed in a way that often traps borrowers into a vicious cycle of debt. It is not without any reason why sixteen states have either completely banned payday lending or have strictly imposed low rate cap. What is more, even the FTC has warned consumers against these loans. Considering all these facts, it is obvious that these fast loans are not exactly what they are advertised as. So, here’s the secret behind it that you must be well aware of.

How Does Lenders Secure Their Money?

Fast payday loans are easy to qualify for. You can apply online by filling out a simple 2-minute form, providing some basic details. Unlike what happens in conventional loan applications, you are not asked to go through complex paperwork. There is no need to fax any documents. What is more, lenders do not even check your credit score. Even if you have bad credit, that does not disqualify you as long as you are at least 18 years old, a US citizen, and have a checking bank account in your name with a decent employment record. All these lenders ask you for is to submit a postdated check with the amount of principal plus interest and finance charges. Lenders send this check for collection on the set due date, which is the next payday. Alternatively, you may also be asked to authorize the lender for direct debit from your checking account. This is how they secure their money.

If in case the check or the request for automatic debit bounces, they make it an excuse to charge hefty penalty charges on the fast payday loans you have borrowed from them. Many lenders are so unscrupulous that they send the same check again and again for collection, which means you are charged NSF fee multiple times for no genuine reason. Even your bank also charges certain amount of fine every this happens. Besides that, you are also charged additional interest for every single day of delay in repayment. This way, the outstanding balance on your debt grows very fast.

Since fast payday loans are extremely costly, people with limited monthly income often fail to make timely repayment and eventually get themselves trapped into a vicious cycle of debt. That is the reason why it is often advised to avoid these loans and work on better alternatives. Believe me, there are several better alternatives available out there you just have to look into the right direction.

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