Payday Loans

Why Eligibility Criteria For Paycheck Advances Are So Simple?

You must be wondering why payday loan companies that offer paycheck advances have kept the eligibility criteria for the same so simple. Isn’t it risky for them? Unlike conventional unsecured loans, lenders approve loan on the basis of credit score of the applicant, but payday lenders do not find it necessary. They offer loans to even those who are having bad credit. All they want from the applicants to have a regular monthly income, a checking bank account, at least 18 years of age, US citizenship, and a decent employment record. You do not have to go through complex paperwork. You do not even have to submit or fax any document. You just have to fill out a simple online application form, and if you meet the basic eligibility criteria, you will get your money directly credited to your bank account within two business days, sometimes even the same day, within a few hours. Lenders have intentionally made these cash advance lending programs highly lucrative so that they can easily justify the extremely high rate of interest they charge on these loans and other unfair practices they are usually engaged in. The following information should help you get a better picture.

The High Interest Is Charged To Cover High Risk

The most common excuse that payday lenders give for the extremely high rate of interest charged on paycheck advances is that they do this to cover the high amount of risk they take by offering these easy loans on simple terms. Well, if you review these programs thoroughly, it should not take you long to figure out that the eligibility criteria are no doubt very simple but other terms and provisions of these loans can turn out to be very costly. Even if it is very easy to qualify for these loans and borrow money almost instantly, it does not seem to be fair to charge over $50 for every $100 of loan issued for as small a repayment period as fourteen days. If you are tempted to borrow these cash advances because of the attractive features they offer, you are advised to do some basic homework and first get realistic details on how much exactly these easy loans are going to cost you. Can you afford to repay over $750 for a $500 of loan taken for two weeks?

Hiding The Predatory Nature Of Payday Loans

It should not be an exaggeration to say that the simple eligibility criteria for paycheck advances and other attractions that come with these lending programs are actually an attempt to hide the predatory nature of payday loans. There are currently thousands of consumers who are trapped in a vicious cycle of payday debt; many of them are even on the verge of bankruptcy. That is the reason why even the Federal Trade Commission has warned consumers against these loan programs. So, you have to be careful with your decision if you are considering borrowing these ‘easy to qualify’ cash advances. Payday lenders are usually quite unfair with their collection practices. When a borrower fails to repay the loan on the set due date, they usually end up getting trapped into a never ending cycle of payday loans where the overall outstanding debt keeps on growing faster and faster.

Overall, you are advised not to be tempted with the simple eligibility criteria and other attractions that paycheck advances have to offer. There are several better alternatives out there, which you should to try.

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