Taking A Closer Look At Payday Loans And Payday Lenders
You have probably heard a lot about them and you may have even visited one once or twice to get money when you were in a tight spot. Payday loans and payday lenders are an incredibly convenient option to have around when you need cash fast. Even though you may have already had a little experience, it is not likely that you know a lot about these easygoing loan companies. The more you know about payday loans and payday lenders, the more you can appreciate just how different this financial service is from every other type.
Payday loan companies have a lot of different names, but share a common thread.
Payday loan companies go by a lot of different names. Cash advance services, payroll loan providers, short-term lenders, and check advance services are all examples of the names you could find when you are looking for a payday loan. No matter how different the name each place carries, all of these payday loan companies have one basic principle: to help those who need money between paydays get it as fast and as painless as possible, in spite of credit issues.
Payday lenders don't actually turn a huge profit.
It is a common misconception that payday loan companies take advantage of people who have a low income to make huge profits. While the fees for a payday loan can vary from state to state, most lenders do not turn a huge profit. Even though the percentage rate seems higher than what would be usual with a long-term loan, the operating expenses are also much higher. A study by the FDIC found that the charges are actually fairly in line with the costs associated with operation, which includes a substantially high amount of default loss due to non-payment from borrowers.
Payday loan companies may offer more than just short-term loans.
Many payday loan companies expand their services to include an array of other financial services, which is something that many people do not know. Payday lenders are often qualified tax preparers, often buy scrap gold and silver, and may even offer other loan products, including short-duration installment loans. Installment loans from payday lenders offer the same simple qualification guidelines as a payday loan, but the repayment plan is dispersed among several paydays instead of just one, which makes it easier for people to avoid getting caught up in an endless cycle of re-borrowing.