Payday loans, commonly referred to as payday advance, are simply small short term loans that are offered to people who find themselves without any money long before their paycheck is due. The purpose of payday loans is to help these people cover the expenses that need to be paid before their next payday. The basic loan process involves a lender providing a short-term unsecured loan to be repaid at the borrower's next payday. Typically, some verification of employment or income is involved, but some lenders may omit this. Individual companies and franchises have their own underwriting criteria. In the more recent innovation of online payday loans, consumers complete the loan application online. The loan is then transferred by direct deposit to the borrower's account, and the loan repayment and/or the finance charge is electronically withdrawn on the borrower's next payday. According to one source, many payday lenders operating on the internet do not verify income. Many people who use it are low-income people with few assets because these people are least able to secure normal, lower-interest-rate forms of credit. Since payday lending operations charge higher interest-rates than traditional banks and less commonly encourage savings or asset accumulation, they have the effect of depleting the assets of low-income communities.
payday loans online