A payday loan, which is sometimes called a cash advance or a paycheck advance, is a type of short term loan. The loan is designed to help out in financial emergencies when money is needed immediately and a paycheck is still a week or two away. Someone who is looking for a payday loan has two basic options available to obtain the money: direct payday loans or hiring a broker.
Broker Vs. Direct:
The two options available when looking for a payday loan are working directly with a lender, which is called a direct lender payday loan, or working with a broker. Both situations have their advantages and disadvantages to consider.
The main advantage of a broker is that borrowers have fewer hassles or confusion. The broker looks for the best lender and does the research. In this way, the borrower is sure that they have the best available deals. The downside of using a broker is that the broker might give your personal information to companies besides the lender. Brokers make a commission from lenders to provide your information for purposes like advertisement. As a result, your personal information is not necessarily safe with a payday loan broker.
Working with a direct lender to receive is a payday loan is the second available option when you are looking at potentially using a cash advance service. The direct lenders are the companies that offer loans. The main benefit of using a direct lender is the safety of your personal information. Direct lenders do not provide your information to any outside source unless it is necessary for the loan or required by law. The other benefit of working with the lender directly is the fact that you do not need to pay a fee to the broker, which ultimately might save some money on the loan. The downside of working directly with the lender is the research involved. Anytime you work with the lender, you need to find the best interest rates, fees and options for your area. You will also need to learn the state laws regarding payday cash advances because each state has different requirements and some states do not allow payday loans.
Whether you work directly with the lender or hire a broker, the information you provide is the same. You will need to provide a loan amount, information about how much you make on each paycheck, proof of identity and a check or a checking account number.
Obtaining the Loan:
Obtaining a payday loan via a direct lender is a simple process. The lenders ensure it is straightforward and clear according to federal laws.
The start of the loan requires filling out paperwork. Whether you apply online or via the Internet, the application paperwork is usually the same. It will ask basic data such as your name, age and address. If you apply online, it will also require an active bank account to deposit and withdrawal the funds. The lenders will also request proof of identity, such as a state driver’s license, and proof of income, such as a pay stub. Those applying online will either fax the proof of identity and income or scan it and send it with the application.
The direct lenders will either approve or disapprove the loan within a few minutes to an hour or so. In general, a few minutes are enough for the approval. Once approved, the lender provides a contract that states the amount of money being borrowed, the fees and interest, the total repayment amount and the date the money is due. All legitimate direct lenders will state the due date and repayment amount clearly in the contract. Any late fees and charges are also stated.
Repaying the loan requires nothing more than providing either a post-dated check in a physical lender’s office or approval for a withdrawal from the bank account for online loans.
Direct payday loans are often better than working with a broker because it has fewer charges, does not risk personal information and provides cash within 24 hours.