Payday loan with savings account only is a form of quick cash advance that can be taken for two weeks or until the next pay date. It is useful in meeting small financial needs ranging from $100 to $1500. This quick personal paycheck substitute comes with a fee which can be from $15 to $30 per $100. This translates to 390% to 780% APR (Annual Percentage Rate). For example, a loan of $400 taken for 14 days will amount to $460 (390% APR). The fee is quite high since the lender safeguards himself as neither any collateral nor any bad credit score is taken into consideration while providing the money. A post dated cheque of the total amount has to be deposited at the lending store.
On the due date, the borrower is supposed to go to the finance company in person to clear the dues (principal plus the fee) in cash. If the borrower is unable to do so, then the lender processes the cheque in the bank or electronically withdraws the owed total from the borrower's bank. If the cheque bounces, then an additional fee is charged on the existing due amount. The original fee may also be hiked. In this case, the borrower has an option of flipping the loan, i.e pay the principal amount and immediately borrow more money for two weeks to pay the fees. In states like Washington, it is a law to provide a defaulting borrower with an extended payment plan. In some other states, The National Trade Association offers an extended payment plan without any extra cost to the customers who have availed a payday loan with savings account only.
Why Is It So Popular?
A survey conducted on the pattern of payday loans resulted that $500 was the most popular amount that people opted for. This fast cash service is very popular with the working class as it incorporates better with their lifestyle.
1. No constraint of time. Can be processed online hence, no need to rush to the lending store before it closes.
2. No queues. Online advance means no tiresome waiting line. The entire procedure takes just a few minutes.
3. No stacks of paperwork. The requirements are so basic that there is no worry about multi documentation as is required in a regular loan.
4. No consideration of a bad credit score or previous history of bankruptcy.
5. No need for collateral.
The above points make the payday loan with savings account only quite a feasible option for the working class as long as the repayment schedule is well planned by the customers and is availed only during times of urgent need.