Direct lender payday loans essentially involve small amounts of money loaned short-term with the intention of simply covering the expenses of a borrower until the next payday comes. Direct lender payday loans may be loosely referred to as cash advances as well, but the difference is that cash advances are only usually provided along with a pre-arranged credit line, like a credit card, As the name suggests, loans are taken out from direct lenders.
There are different laws in place governing payday loans and they differ from country to country, and from state to state within the US. Some areas put a limit on annual percentage rates to prevent usury. Some areas, on the other hand, are extremely lenient on payday lenders. But if you ask other areas, they’d rather that payday loans be outlawed entirely. Payday loans are actually quite risky to offer from direct lenders, with losses of between 10% and 20% on their annual earnings by default.
The process that direct lender payday loans follow is pretty simple, involving typically some form of verification of income or employment. Some direct lenders may even choose to take out the verification part completely. It all starts out when a borrower goes to a lender to secure a cash loan. Both parties agree that the loan amount will have to be paid come the next payday. The borrower writes out a postdated cheque and leaves it with the lender, placing the full loan amount and fees down, as a guarantee. When the time to pay up for the loan comes, it is expected that the borrower will meet with the lender. Should the borrower not show up, the lender can encash the cheque. Should the borrower’s account not have sufficient funds to cover the full amount and fees stated on the cheque, then he will have to face additional charges from his bank for the bounced cheque and higher interest rates from the lender.
For online direct lender payday loans, application forms are submitted over the internet or faxed to the lender. Approved loans are converted into direct deposits to the borrowers’ accounts, with repayment and additional fees electronically withdrawn as well from the borrower’s account when the following payday comes around. For the most part, online lenders generally don’t verify income or run credit checks. General requirements for both online and offline lenders usually include: having a net income of a minimum of $1,000 every month; having a valid savings or checking account; and having stayed at your current employment for a minimum of three months.
There are different lenders online and offline and there are different kinds of loan arrangements you can take advantage of. Making direct lender payday loans work for you is a matter of finding a lender and an arrangement that truly addresses your needs. For instance, if you know that paying back a loan in two weeks is impossible for you, then look for a lender that can give you up to 100 days to pay up instead. Check out reviews. Ask people you know. Payday loans are great quick-fix solutions you can take advantage of most especially today when the economy is not at its best.