A payday loan is such a loan that is generally given for the tenure of a single day and is returned the next day. Sometimes a borrower provides a post-dated check to the lender and borrows money from them. The payday loans come with a few high-interest rates which will never exceed more than 35%. The lender generally calculates the interest on the basis of the days. A payday loan is generally taken by the businessmen to meet their daily requirement of money to run the business. They generally take these kinds of loans from the small business merchants who provide money on high-interest rates.
Why Need Quick Payday Loans?
Money is required in every stage of life. You never know when you need money for what issue. This is why you need to be prepared with money every time which is quite impossible though. You may avoid the family needs but ignoring some issues like the treatment of any of the members can never be ignored. The instant requirement of money can be fulfilled only by the money lending agencies or the banks where you can take loans on a stipulated rate of interest. But the process of loan approval is quite lengthy due to its intense paper works. This is why the quick payday loansare very popular among people where you can have instant cash at your hand to utilize.
Not a Very New Concept
The concept of the quick payday loans is not a very new one in the Indian context. There were some rich people called the ‘Mahajans’ who used to provide loans daily and the interest rates used to be high. Generally, the poor farmers of the villages and the small businessmen or the hawkers used to borrow money from them for their daily operations. But these people used to make the loan rollover which means the borrowers had to take another loan from them to pay back the previous loans and the loan amount used to increase day by day.
Pioneering the Quick Payday Loans
Though the concept was not a very new one in the Indian context, it became prevalent in a broader context from the year 1990. The quick payday loans grabbed a huge portion of the money lending market and that’s how the online loan industry started facilitating the people by providing them loans while they didn’t have to get out from home. After being famous in the online loan market, the company which provided the first online loans started their office in California in the year 2002. It is now very easy to get personal loans, auto loans, or home loans sitting in your house.
Requisites of Quick Payday Loans
Generally, the banks provide loans on the basis of the credit score of a person. Now the question is what is a credit score? The credit score is a score assigned to you based on your financial health. This is one of the most important prerequisites to get quick payday loans. A credit score is generally calculated based on various aspects of a borrower like the income of the person, the status of work, the amount of disposable income of the person, lending history of the person and so on. These aspects help to assign the credit score to the borrower.
If your credit score is not so good, then the banks will refuse you to give loans or may approve lesser amounts of loans to you. But some online lending agencies give you payday loans with no paperwork even if you are having a lower credit score.