A payday loan, is an unsecured loan that does not require any guarantor and is collateralized by lien which circumscribes all types of mortgage forms, and in case the borrower is not able to repay the loan, the lien then becomes the property of the lien holder. A payday loan is used for short period of time to meet the unexpected expenses.
People can now also apply for an online payday loan by applying to a bank and filling the personal details about income and expenses and to facilitate the process, inbuilt online calculators are used to calculate the loans and the EMI (equated monthly installment) that needs to be paid within a given time period. Continuous Payment Authority (CPA) is also a method through which loans can be repaid. Through CPA, the money lender takes money directly from your bank account. Both the parties need to be honest and trustworthy so that the whole process can be made easy.
The borrowers need to remember that some money lenders charge late fees if the EMI is not paid on time leading to more debt. Thus it is advisable that you continue to pay the installments on time.
Tracking and Analysis
It is important to keep track of your expenses and other financial expenditures so that you can know if you are able to repay the loan until your next payday.
As a borrower, you need to keep in mind the consequences that can happen if you borrow money through online payday loans.
- The positive consequence of taking a payday loan is that if you repay it on time, then your credit history will reflect positive inputs from the lender and thus giving your credit score a positive image.
- Not every money lending organization is trustworthy and it can also be a fraud company. Thus you need to get every minute detail possible before taking the loan.
- Taking loans on frequent basis can lead you to debt traps because to repay the first loan, you take the second one and the cycle continue. Be sure that you are able to repay it before applying for the loan.
- As mentioned above, some moneylenders before giving you the loan take your bank details in the name of continuous payment authority and start withdrawing small amounts and that’s how you get trapped into a scam.
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