The History of Payday Loans & How they Work
Payday loans, or paycheck advance, is a small loan intended to help consumers in the short-term to cover expenses until their next payday. Throughout history, men and women have utilized such loans from various people and/or organizations to help them float until their next paycheck. In the United States, it wasn’t until July of 1996 that the senate legalized such loans.
The passage of Senate Bill 1959, made it possible for everyday people to obtain secure small, emergency loans, without having to undergo a credit check or wait long periods of time for approval. Thus, people with recent bankruptcies, home foreclosures, and low credit scores would be able to get by until payday.
Most payday loans in Huntington Beach are offered at relatively large annual percentage rates (APR). As payday loans are becoming more and more popular, some jurisdictions are beginning to limit APRs and fees to make the process fairer for everyday men and women.
How Approval Works
A payday loan is granted to those who can prove they hold a regular job. In order to provide proof the applicant must provide their state ID, a recent printout out of their primary bank account, and a blank check. Approved loan amounts usually range between $100 and $500.
How the Loan is Paid Off
Cash Advances are paid off by electronic debit. Prior to finalizing the loan, the loan recipient authorizes the loan amount to be pulled out of their bank account on or right after payday. If for some reason there isn’t enough money in one’s bank account when the loan is due, extra fees and increased interest rates are applied as agreed upon.
The Future of Payday Loans
Finance industry experts agree that in today’s economy payday loans will be increasingly utilized. Thus, payday loan rates are becoming more competitive, while credit unions and traditional banks are continuing to add such loans to their menus of services.
If you choose to access funds via payday loan, make sure that you work with a lender that you trust and always carefully read the full agreement prior to authorization.
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