Payday loans are not a novelty on the Australian financial market. They have been around for decades and they will be around for decades to come. To put things very simply, there is great need for loans like this and there will always be need for them, especially when the going is tough like it has been in the last few years and when people find themselves more and more in situations in which they need a quick buck that will help them weather a certain storm.
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Payday loans are a very particular type of loans as they are limited n their size, as they need to be repaid very quickly and as they involve interest rates that can become quite a burden if payday loans are used improperly. But, let’s start from the top.
Payday loans, like every other type of loans, are provided by certain lenders, either companies, banks or businesses that specialize in this type of loans. These providers are not that difficult to find, especially when you factor in all the online businesses that offer payday loans. Once you approach one of these providers for a loan, you will be asked to provide some basic information about yourself, such as your name, your address and some additional personal details. You will also be asked to produce a document that shows that you have a steady source of income and that you will be getting a pay check in the following month or so. Besides this, they are not interested in much more. They only need to have basic info on you and the proof that you will be able to cover the repayment when the time comes.
The time comes much sooner with payday loans than with other loans and this time is anywhere between a week or two and a month or two. Payday loans are usually given with the limit of two weeks for repayment. In general, the lender will give you that much time as there is before the next pay check that you receive. In many cases, the repayment is automated with the lender getting their money back automatically without you actually repaying them the money. This is particularly common with online payday loans where the lender transfers the repayment from your account automatically as your new pay is transferred to your account.
It is absolutely essential that you remember that payday loans come with high interest rates and that much, much higher than anything you have experienced before in case this is your first experience with payday loans. We are talking APRs that make even the most harsh loan interests seem like child’s play. The lenders need to charge these interest rates as otherwise it would make no financial sense for them to provide this type of financial service. Also, they need to cover for the losses they incur due to default rates which are very high on payday loans.
You also need to remember that the fees and overheads are extremely high on payday loans and you need to make sure that you have the means to repay the loan in the agreed upon timeframe. If you are not sure that you will be able to cover the expenses of your loan, it is best that you avoid taking one out. It is particularly dangerous to start covering for payday loans with other payday loans. This sometimes happens and it can be very difficult to exit this loop.
In short, you need to remember that payday loans have high interest rates, that they are limited and that you have to pay back ASAP. Also, you need to remember that they are easy to obtain, quick to obtain and can be very helpful in times of need.