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Pay Day Loans: Beat the Crunch

The month is just halfway and you find empty wallet the prevailing reality. The question that strikes your mind is how you will work your way out till the next salary flows in. Friends may be the immediate option but not always the best one. So things boil down to one logical option known as Pay day loans. They help you tide over your short term financial crunch till your next pay comes in.

Basics of Pay day loans

These loans are also known as cash advances. The lender gives it to borrower without much of security. These are small short term loans given out to borrowers so that they can manage their expenses till their next salary or pay day arrives. This can be offered against some credit such as credit card. Pay day loans .Rules and regulation regarding pay day loans are different in different states of U.S.A. The following is explained with the example below.

If Bill stays in Florida then he can obtain pay loan as lending pay loan in Florida is legal but if Bill stays in the state of Connecticut then lending of pay day is prohibited.

Qualification for pay day loan

The following things need to be in place if a person wants to procure a pay day loan .He must submit a bank statement which reflects a steady source of income.  After the lender is sure that you qualify the criteria, they demand a post dated cheque which would include full principal amount and the fees for the necessary services provided to you. This cheque stands as a guarantee that you have the intention of repaying the loan. On the day when loan matures, the Borrower either in person can return the loan amount in full or the lender can encash the post dated cheque which the borrower gives out to the lender.

Legalities in different states

If Bill stayed in Alaska the maximum amount of loan he could procure is $500.The term of loan will be 14 days. Finance charges for $100 loan for that period would be $20.Morever it is legally sanctioned in the state of Alaska. If Bill stayed in Georgia then pay day loans are prohibited in that state. If Bill stayed in Illinois then the maximum loan amount which he can procure is $1000 or 25% monthly gross income. The term of the loan can vary from 13 days to 45 days. Finance charges for $100 loan for that period would be $15.50.Thus every state has their own regulation over the legality, amount and the finance charges.


Small help can count big relief. People who are left with no option in times of financial difficulties can bank upon the short term help provided through pay day loans. It also goes out to help people with low incomes.  This provides them with a healthy option than the predatory lenders who are ready to exploit the low income group for every possible reason. This system can also help people who are coping up with the natural disaster and who are in urgent need of the financial assistance.


The argument which are casted against pay day loans are that it exploits the people who are facing economical hardship and they charge high interest rate then the normal lender that is the banks and the other institution. As high interest rates hardly leave any space for saving these goes against the interest of the people facing economic hardship. These loans are also not suitable for those people who have unsteady income as they may not be eligible for such type of loan.

The above loan can be viewed as a person wants to view it but the use fullness of the concept can be effectively harnesses if the system implements it in spirits and words and having a strong regulation to look after the draw backs of the issue.


Posts by SpeakBindas Editorial Team.

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