Default Payday Loans, A Viable Option?

Payday loans are short-term loans that are extended between two pay days. A payday loan is normally provided for 14 days. The borrower, on acceptance of the loan conditions, provides a check favoring the lender as security against the loan. On the due date, the lender deposits this check to recover the loan dues. The due date is generally the next pay day of the borrower. No credit checks are conducted for granting payday loans. Therefore, the FICO score of the borrower is irrelevant. It doesn't matter whether the borrower has a bad credit history, or has no credit history, or has declared bankruptcy.

To qualify for a payday loan, the borrower needs to fulfill all of the following conditions. There are no exceptions.
*You must be a US citizen.
*You must at least 18 years of age.
* You must be at a full time job currently and must be at this job for at least three months.
* You must either have an active checking account or a savings account.
* Your after tax salary should be at least $ 1,000 or you must have a fixed income of $800.

Default payday loans carry a very high cost. Generally the lender fees for a $ 100 payday loan is anywhere between $15 and $25. It should be remembered that this fee is for 14 days as the loan itself is extended for these many days only. If one considers the cost on an annual percentage rate (APR) basis, the average is 391%, which by any standard is exorbitant.

By law, it is mandatory for the lender to specify the APR to the borrower. Many lenders do compare the cost of payday loans by phone against other forms of financing; but the common denominator of such a comparison is that all of them are very expensive.

Payday loans should be availed only during emergencies. Considering the fact that the cost of carrying a payday loan is very high, it should be a resource of last resort. If one implements good budgeting techniques and has a good financial plan, the need for borrowing by way of payday loans can be minimized. Moreover, one must ensure that a payday loan is paid on time. Payday loans should not be rolled over or extended as within no time the borrower will find himself or herself in a debt trap where money may have to be borrowed just to repay the interest.www.phonepaydayloans.net