Payday loans are fast cash advances given out to consumers in need. These are different from traditional loans. There are special companies which give out thee loans. They are called payday lenders. Payday lenders are both store-front, and online.
Payday loans are short-term loans for a small amount of cash at a very high rate of interest. The amount of the payday loans is usually a percentage of the borrower’s salary. Traditional paydayloans usually have a tenure of 2 weeks to 4 weeks, such that the due date is set as soon as the salary is credited in the borrower’s account. On the due date the borrower must pay back the borrowed amount, the interest accumulated, and any other charges that the lender has put in the agreement of the loan.
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In recent times some payday lenders have come up with some new repayment plans to make payback easier on the pockets of borrowers. These type of payday loans are very often called installment payday loans or if the term is a three month term they are also called 3-month payday loans. All the basic parameters of this loan are like the normal payday loan only, the main difference is in the term of the loan.
Principal Amount – The principal amount of this loan is usually guided by the monthly income of the borrower and is equal to or a percentage of that; hence the next pay cheque of the borrower acts makes this loan secure. In most of the cases the amount lent by a simple payday loan or an installment payday loan, however in some cases the lender may increase the limit of the amount a consumer can borrow as they may be able to pay back in installments.
Duration – This is the main difference between the two types of payday loans Las Vegas Nevada. While in the simple one the tenure is very small and usually is around 2 to 4 weeks. As soon as the tenure of the loan ends the borrower must pay back the principal along with the interest and in many cases a service fee for the loan. In the installment type, the duration is of 3-months (or more in for some lenders) and the borrower must pay back the total amount in three equal installments.
Charges – Whatever type of payday loan you select, the interest rate is very high. The APR on a payday loan can go as high as 700%. As the total interest will be calculated on the direction, as the term offered by the lender increases so does the final amount that must be paid back.
Borrower Check – Payday lenders do not do a lot of background checking into the financials of the consumer asking for a loan, however, the lenders giving out the three-month loan may do even less background check as the payback is divided into installments making it easier for the borrower.
Regulations – In the United States of America, payday lending is regularized in some states and illegal in few. These regulations give directions to lenders regarding maximum amounts they can lend and charges the can extract from borrowers. Regulations will mostly stay similar for both type of payment plans, however, few states may have defined a broader repayment plan.
You should read through all the terms and conditions on which a lender is offering the loan and understand how much they will end up paying back to the lender. The option to pay back the total in three equal installments over three months does make it easier for you to meet your demands and still be able to easily pay back what you have borrowed.