What Is a Payday Loan and How Does it Work?A payday loan is a type of loan that is very different from other personal loans. This isn’t the kind of loan that you get at the bank. It is unique and designed for real, working people. The key element of a payday loan is, of course, your pay. If you work full time and earn a regular income, you should have no problem getting approved for this type of loan. And, it will work around your pay schedule so it’s convenient and easy to repay and afford.
A Payday Loan is Based on Income More Than Credit
One of the most important things about a payday loan is that getting approved for it and the amounts approved are largely based on income, paycheck amounts, and your job history. Other types of loans, especially more traditional loans, are mostly based on credit. These two factors are very different and can mean the difference between getting approved and denied for a loan. If you have made some money mistakes in the past, there is a good chance your credit score isn’t great, and if it’s not then you may not be able to get a typical bank loan. Payday loans, based on income, are more forgiving and look at your earnings to give approval, not credit score.
Payday Loans Are Online and Mobile
Another important difference between these and other loans is that payday loans are available online. Apply online, get approved online in minutes, and even get your cash transferred virtually so you never need to go to the bank or anywhere else to access loans and cash. There is even a mobile app now that you can download just once and use again any time you need a payday loan. It gives you the convenience of being able to get to a lender from anywhere, so you’re not tied down to home or work or wherever you have access to a computer. Being online makes these loans convenient but also fast, so you get payday loan cash sooner.
Repayment for a Payday Loan is Also Based on Your Pay
When the due date on a payday loan comes up, you won’t have a chance to forget or pay late. This is because the lenders who offer these loans make every step of the process convenient and easy. All you need to do is be sure you apply with the information for the bank account where your paycheck goes on payday. The lender makes a deduction from that account on the day your loan is due, which is typically your next payday. This not only prevents you from forgetting to repay a loan, it also ensures you will have the money ready to pay it because repayment happens on payday.
The way a payday loan works is different from many other loans. In a lot of ways it’s much better. When you understand what these loans are, you can make the right choice about whether or not they are right for you.