Loans and Finance: Pay Day Loans And Direct Loans

Payday loans are usually used in financial emergencies and are designed to be short-term solutions. A payday loan is a paycheck advance or a small, short-term loan. This will cover a borrower's expenses until the next payday. Payday loans or pay day loans are also known as cash advances, though ?cash advances' can also refer to cash provided against a credit card.

Legislation regarding payday loans varies widely all over the world. The loan process enables a lender to provide a short-term unsecured loan to the borrower who will repay on his/her next pay day. A borrower may visit a payday lending agency and secure a cash loan, with payment due in full at the borrower's next paycheck or pay day. The borrower writes a postdated check to the lender with the full amount of the loan and fees. On the maturity date, the borrower has to return to repay the loan in person. If the borrower does not repay the loan in person, the lender would redeem the check. If the account of the borrower is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the direct loan, and the loan may incur additional fees as a result of the failure to pay.

For online pay day loans, consumers can complete the loan application online. The loan amount is then deposited in the borrower's account and the loan repayment plus fees are electronically withdrawn on the borrower's next payday. There are numerous companies offering payday loans online and offline. A borrower of a pay day loan must be at least 18 years of age with a good savings account. Additionally, employment or income of at least 90 days is required and the borrower must receive income at least once every two weeks.

Individuals mainly use direct loans during a debt crisis like unemployment, medical or unplanned use of savings. A borrower can repay the direct loan amount over an extended period of time by monthly installments. Direct loans are preferred by many due to their flexibility, convenience and ease of use. The lender directly contacts the borrower and there is no third-party involvement. These loans are often less expensive and the cost of processing by third party companies is completely avoided in the loan proceedings.

Source: http://egosumsara.blogspot.com/2012/09/pay-day-loans-and-direct-loans.html

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