Pay day loans, also known as cash advance, post-dated cheque, cheque advance or deferred deposit loans are a short-term loan that are usually characterised by high interest rates and low-balances. The loans are usually borrowed on a cheque that is then cashed on the borrowers pay day salary. Consumers generally use them as a source of quick and easy cash that they can use while they wait for their pay day to arrive. Pay day loans are often usually charged at usury rates. These are interest rates that are often staggeringly higher than the agreed upon market interest rate of a specific country. Usury rates are charged most often on unsecured loans by small and medium private lenders. These rates are usually considered illegal in most countries at they often manipulate and swindle low income, non-informed and unsuspecting borrowers. Because these loans are generally designed to be simple, quick and easy to get, their qualification requirements are usually a lot easy as well. According to the most financial regulatory authorities around the world, the main requirements set up for these loans are usually as follows:
A borrower must have an active financial account- The way payday loans work is that a borrower approaches a pay day lender and asks for a certain amount of funds. After ascertaining their eligibility, the lender calculates the appropriate amount of lending fees chargeable on the amount the borrower is asking for. The borrower then writes a cheque for the total loan amount and the lending fees and then gives it to the lender to be cashed on a due date that is after the borrower’s pay day. When the pay day arrives, the borrower can pay off the loan or allow the lender to cash in the cheque on the post-pay day date put on the cheque. As a result, one must therefore have an active financial account from where they can write cheques and where a lender can cash in the cheque.
A borrower must provide proof of income- The loan itself is called a payday loan, which means that a borrower who intends to take up the loan must have a source of income from which he expects to be paid on certain date. Therefore, should the borrower fail to pay up the loan himself, the lender can then cash in the cheque from the borrower’s account. A source of income is therefore one of the major requirements.
A borrower must have proper and valid identification documents- It goes withot saying that in order for any financial transaction to take place, a borrower must have an identification document. This shows the lender that the account they are about to transact in actually belongs to them and that they are not committing any ats of fraud or misrepresentation.
A borrower must be 18 and above- the last requirement is also a general, internationally recognised requirement; that one must have attained the age of 18 and above, no financial transactions or contracts can be entered itno with a person who is not yet an adult.
These are some of the requirements one has t meet in order to qualify for a pay day loan.
For more information :- payday loan by Cashmax St. Catharines