How Do Payday Loans Work

Payday loans refer to small, unsecured short-term cash loans that help borrowers tide over their immediate cash needs, till they receive their next salary. Though it is a small amount which is granted, still the interest rate is quite high, normally in the range between 30%-50%.

What are Payday Loans?

• Payday loans are small unsecured short-term cash loans meant for the working class to meet their immediate financial needs, till they receive their next salary
• Convenient for meeting urgent cash needs like monthly bills, medical emergencies, paying school fees, urgent house repairs, etc.
• Does not require any collateral or guarantor
• Even a person with a bad credit history or a low credit score can avail of a payday loan
• Repayment tenure ranges from 7 to 60 days, normally to be repaid by the next payday of the borrower
• Entails high risk so interest is on the higher side at around 30% - 50%
• Can be availed through online and offline 

How Do Payday Loans Work?

• The form has to be collected from the respective lender bank or their online portal
• Fill the form with the requisite information and submit it  
• Keep the required documents ready, as deemed necessary by the respective lender
• Wait for approval of the loan by the lender
• After loan approval, the lender asks for requisite documents 
• Submit required documents like proof of income/identity/age/address/employment
• After documentation verification, the loan amount would be credited to the borrower account

Eligibility Criteria for availing Payday Loan

For anybody to get a payday loan the following criteria have to be met by the borrower

• Should be of at least 18 years
• Should be a citizen of India
• Should have a regular source of income 
• Should have an active salary account
• Should have an active phone number
• Mandatory requisite documents

Points to Keep in mind, before Choosing a Payday Loan

Payday loans help the working class meet their urgent short-term financial requirements.

Though easily available, they come with high interest rates. 

So, make sure to calculate all the costs involved, to decide if it’s the right choice for you.