Where paycheck advances help people with their cash flow

Payday Loan Explained

Despite the controversy around payday loans, law allows them in a majority of the states because they serve a real need by millions of Americans. Managed responsibly, a payday loan can be a way for working people to establish more solid footing, financially, when times are tough and emergency expenses land at their doorstep. Let’s examine what a payday loan is and how it serves people, in the past and in the present.

Payday loan advance: Historically, payday loan advances came from your boss, your brother-in-law or someone in your neighborhood.

The boss part was straightforward: you asked your employer to be paid early, which made some logical sense. You already had provided value to your employer by working a week or more without compensation in hand. You simply wanted a portion of your paycheck early. If the company was small enough, the decision was easy (your boss may well have been the company owner, who also was the company bookkeeper). There might be a question or two on why you needed the money sooner, but that usually meant you were going to get the cash. Only small companies, where the employee is very secure in his or her relationship with the supervisor, may still do this today.

Family might also be a source of a payday loan advance. But don’t expect you can get away with this without an interrogation. “What do you mean you’ve run out of cash?” “Why didn’t you save a little every week so you would have a rainy day fund?” In many families, the stress of current economics is such that no one has the spare cash anyway.

The guy down the street was always there and remains there. He might be a little shady, and he’s doing it for the money he’ll charge you. He might even use strong-arm tactics to get you to repay him. In most cases, private loans such as this involve valuable collateral, such as jewelry or other goods. Miss that loan repayment and you might end up losing a lot.

Understanding payday loans

Same day payday loans: What have developed recently, in a different time with different workplace policies, are commercial sources of payday loans. They can get you your cash in a day or by the next business day. These began with payday loan stores, found in storefronts that may or may not be located near your home or work. You needed to go to one, stand in a line and transact this financial exchange within earshot of others standing in line behind you. If you can prove your will receive a paycheck in the near future, you can get money from a payday loan store. But for most people, it is not convenient or private.

The Internet has revolutionized the commercial payday loan industry considerably. The basic exchange is the same – you prove you are employed, and they loan you an amount of money that is allowed by state banking/lending laws – but it’s done entirely online from a personal computer. It is a lot faster and much more private. The money is usually direct deposited into the borrower’s checking account by the next business morning.

No credit payday loans: A traditional credit report is not required to get a payday loan. This is a key factor for anyone who has suffered a declining credit score, as banks and credit card companies simply will not provide credit to anyone with a score that is lower that a certain number (and doubly frustrating for the person trying to raise their score but suffer further credit “dings” when they lack the cash to pay a bill).

Also not required to get a payday loan: collateral or co-signers.

Pay day advance loans: Life in the 21st century simply requires that you have access to credit. Access to cash is the lifeblood of all businesses. Access to loans is even required of the rich: it is nearly impossible to move about in the world without at least a short-term advance in some form. The working person needs pay day advance loans if they hope to keep their vehicles in good repair, to buy medicines that are not 100% covered by a health insurance policy, or to travel to tend to family emergencies.

Fast pay day loans: Speed is what it is all about, in how you process your loan and when you get your money.