Pay Day Loan Rules
Sometimes bills or unexpected costs can put consumers in a bind. They don't have the cash or credit to meet their obligations, so they go to a payday lender. After meeting certain criteria, they can borrow the money for a fee. The amounts and times allotted for the loans vary for each payday lender.
Other People Are Reading
-
Payday Loans
-
Payday loans are short-term loans. The payday loan company holds a personal check from the borrower for future deposit or electronic access is given to the borrower's bank account. Borrowers who need to borrow money until their next payday will write a check for the approved loan amount, and include the fees the payday lender has assessed for borrowing the money. A payday lender will keep the check, and once the duration of the loan has expired, the borrower will either come in and repay the loan or the lender will run the check through themselves.
Borrowing Limits
-
Depending on state law, payday loans can range from $100 to $1,000. Payday loans require that the borrower have a verifiable income to guarantee repayment of the money they borrow. The amount the borrower makes will determine the amount the lender will loan out. The rules of payday loans require that whatever amount the borrower borrows, they must pay the lender back. There can not be partial payments, however the borrower can borrow again once they have paid off their first loan.
-
Valid Checking Account
-
Before a borrower can borrow any money, the payday lender ensures that they have a valid checking account. The checking account must be in good standing, and not be overdrawn at the time of the loan. The payday lender representative will check the status of the account of the bank, with the permission of the borrower. The bank account must be in good standing because if the borrower does not repay the loan, the lender will have access to the account and can collect any money and fees owed.
Verification
-
Although a bank account is needed, as well as verification of a steady income, payday lenders do not conduct a credit check. The payday loan company will only check to see whether the borrower has other payday loans out, and then the lender will decide to loan the money on a case-by-case basis. Some payday lenders will ask for a utility bill or bill of some kind to show proof of residence.
References
-
Payday rules allow lenders to request references from the borrower. These references are needed in case the borrower does not repay the loan, and the lender is unable to contact them. Some individuals move, switch jobs, close their banking accounts and change phone numbers for various reasons. If this happens, the payday lender might not have any way of contacting the borrower for their loan repayment. They can then contact the borrower's references in these instances.
-
