Online cash loans is a term that is used to refer to the lending of money to people on the promise that they will pay upon receipt of their next wages. These cash loans are mostly short term as they are dependent on the salary the borrower gets, and it is this which he or she will use to repay the money owed. Many countries have legislation which governs the procedure through which banks and other lending institutions may be able to offer the small amounts of money to the many people who come to their doors seeking to address this specific need.
The legislation formulated by the various governments and parliamentary houses in the different countries where payday loans are given serves to protect the general public from the unscrupulous tendency of banks to be ruthless in the interest rates acquired by these loans. Due to the short amount of time between borrowing and payment, banks will generally seek to have a high percentage interest rate in order to reap maximum possible benefits from the loan. This has however been countered by legislation which limits the maximum amount of annual percentage rate that any lender can charge on payday loans. The law may not specifically target payday lenders, but can be a general law which refers to all lending institutions in a certain state or country.
The process of acquiring payday loans is simple and straight forward. It basically involves a lender with money providing a borrower with an unsecured short term loan which upon agreement, is to be repaid as soon as the borrower’s next payment from his work place arrives. Documentation showing proof of employment of the borrower can sometimes be required depending on the rules of the institution, but some lenders may skip this step. Simply put, the borrower walks into a lender’s premises and writes him a post dated check, on it the full loan amount plus interest charged. The lender gives the borrower the money and remains with the check. At the due date, the borrower is to repay the money in person.
Upon maturity of the payday loans, the borrowers should repay the loans immediately their salaries are paid out. Failure to do this and the lender will be forced to cash the check in order to get his money back. Sometimes an account may lack enough funds in it leading to a situation where a bounced check results. This will attract further fees and fines from the banking institution as well as continued accumulation of money owed because interest still applies so long as the loan has not been repaid yet. One also has the option of applying for the loan online where all that is required is to fill out an electronic form and if it is approved, the money is paid out directly into your bank credit.
The lending of this kind of loans is a risky business as failure to pay is common among borrowers. It is estimated that these defaulters cost the industry about one forth of their total revenue. As a result of this, the lenders have resulted to scare tactics which are illegal as well as crimes. These as well as other issues have earned these lenders a bad name to the public. The concept of these short terms loans is viewed as exploitation, where these people earn their living by draining money from the low income earners in society. Many countries have banned payday loans all together.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk