Same day payday loans provide a means for individuals to have quick access to cash with no credit checking. These loans are usually used for an emergency, such as car repairs or emergency medical bills. The Wall Street Journal calculates there are 23,000 payday lenders, which account for a $70 billion financial industry.
Description of Same Day Payday Loans
A same day payday loan is basically a short-term loan for small amounts of cash. The average amount borrowed is $500, but some payday companies will loan as little as $100 or as much as $1500. Borrowers are able to receive a cash loan on the same day they apply for the loan. In most circumstances, borrowers obtain a payday loan to meet their financial obligations until the next payday; hence, why the loan is called what it is.
Most payday loans are due in two weeks; however, some loans can be set for one month. Payday loans are short-term only. If borrowers can not pay the loan back when it comes due, they must take out a new loan.
Procedure
To receive the immediate loan, a borrower typically fills out a post-dated personal check or gives an authorization for electronic access to his or her bank account. Lenders hold onto the check until the due date when the amount of the loan and the fee must paid in full. To pay off the loan, the lender can deposit the post-dated check or the borrower can redeem the check by paying the loan off in cash. If the borrower cannot pay, he or she can pay the interest amount and “flip” the loan, and pay it off in another two weeks for an additional interest charge.
Interest
The amount of the personal check is made out for the amount of the loan and a fee or an interest charge for the loan. The average fee amount charged is $20 per $100 borrowed. For example, if a consumer borrows $500, then he or she writes out a personal check for $600. This translates to a interest charge of 520 percent. Some states have capped the fee amount that can be charge for a payday loan. For example, Illinois has capped the amount to be charged at $15.50. Other same day payday lenders charge as much as $30 per $100 for a two-week loan. The average APR interest charges vary between 390 percent, when $15 is charged per $100, to 780 percent, when $30 is charged per $100.
Requirements
To be eligible for a same day no fax payday loan, a borrower just needs to prove he or she has a steady job with a reliable income. A check stub usually works. The borrower must also have proof of residency and a legal bank account.
Regulations
Regulation of payday loans is left up to individual states not the federal government. The only federal laws governing payday loans is limited to military personnel. Same day payday lenders can only charge military personnel 36 percent APR. Fifteen states have banned same day payday loans. Those states are: Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Vermont, and West Virginia.
Users of Payday Loans
According to Senator Joe Lieberman, the average income of those borrowers using same day payday loans to meet financial obligations is between $25,000 and $30,000 a year. The typical same day payday borrowers are people who don’t have access to other means of credit, like credit cards or traditional bank loans. Other frequent borrowers are those who are on a fixed income; for instance, seniors or disabled Americans who depend on Social Security.
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