Payday Loans - Quick Solutions For The Cash-Strapped

By Mark Bonders for mortgage-and-loan-info.com

Payday loans are the topic of most financial debates these days. A payday loan is a short-term, small-dollar unsecured loan that one can get as long as he or she can prove that he has a job or payday coming (to pay the loan). Many online payday sites offer a loan payment calculator so you can easily compute how much you need to pay, however (and this is one of the arguments of people against pay day loans), not all pay day loan sites reveal their finance fees.

A pay day loan works this way. You are allowed to take a cash advance if you can confirm the following basic requirements:

• you are gainfully employed for at least the last six months,
• your net monthly income is anywhere between $800 to $1200,
• and you have a direct deposit account where your current employer directly deposits your salary.

Upon confirming the above, you can get a loan from $100 to $2500. The loan amount is dependent on your net monthly income and can be deposited to your account in less than 24 hours. Some pay day loan lenders even offer loans granted in less than one hour!

In return for this convenience, payday loan lenders can apply annual percentage rates (APR) reaching as high as 650%! If you are confused about APRs, here's a more basic illustration. For every $100 you borrow, the pay day loan lender can apply a finance fee of anywhere between $10 and $30. That's a $20 difference! So if you are cash-strapped, ensure that you borrow from payday loan lenders that charge the least amongst other cash advance lenders.

So what is the debate all about? Due to the ease by which people can avail of pay day loans, many find themselves in the payday loan trap where they keep on extending loans instead of settling them. And with these roll-overs, you will soon end up in heavy debt.