Instant payday loans are short-term loans that are useful to
individuals who are in need of liquidity between paydays. The
process of acquiring a payday loan is simple; a job and an
active checking account are the only requirements that need to
be fulfilled in order to qualify for an instant payday loan.
Most loan companies support online transactions; upon approval
of an online application, the loan amount is deposited into the
receiver's checking account. The facility of online transactions
enables borrowers to apply anytime and access the money as well
as return it with minimum fuss. A repayment plan is worked out
at the time of applying for the loan. Usually, the loans are due
next payday but the period of loan can be extended by paying
extra fees. Instant payday loans of up to $ 1,000 can be availed
subject to the applicant's monthly income and the laws of the
The fees involved include transaction fees and interest. Since
instant payday loans do not require a credit check or an
extensive background check and are available to everybody,
including those with bad credit, the interest rates are
relatively higher. Sometimes, instead of interest, lenders may
charge a flat fee either by the day or for a fixed period. The
average cost per $ 100 of the loan amount may be in the range of
$ 15 to $ 20.
Lending companies are required by federal law to post an annual
APR consisting of the transaction costs as well as interest
rates. The borrower can use the APR to compare the rates offered
by payday companies. Online instant payday loan providers can be
checked and approached without having to leave home. Several
online lenders offer loans at reduced rates or with zero
transaction fees for first-time borrowers.
Instant payday loans are easier to get than personal loans and
their quick turnaround time makes them an attractive alternative
for those in urgent need of cash.
Instant payday loans do not affect the credit score of an
individual if the loans are repaid on time; multiple open
accounts and use of credit can affect the credit score while
using credit cards or availing personal loans.
The process of acquiring an instant payday loan involves the
signing of a loan agreement by the lender and the borrower. The
agreement contains the terms and conditions of the loan, contact
information of both parties, fees for bounced checks and late
repayment, and any obligations that are binding on either party.
Non-payment of an instant payday loan does not lead to arrest
but may result in a case in a civil court, which may lead to a
borrower's assets being placed on lien to recover the loaned
amount and court costs.
Borrowers need to be alert to the possibility of falling into a
debt cycle, since with instant payday loans this can be a very
expensive proposition. It is advisable to take recourse to
instant payday loans only if long-term loans are no longer an
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