What is an online payday loan?
Originally, payday loans were intended to be paid back on the next payday. But now things have changed and repayment of online payday loans in the USA is not always tied to a borrower’s paycheck.
What are the differences between payday loans and traditional credits?
Firstly, they are given for a quiet shorter period of time than bank loans. This is because the repayment of loans is associated with or around the next payday. Usually, this period is from a couple of weeks to one month. Moreover, payday loans are paid by a single payment, unlike credits which consist of multiple payments.
Secondly, there is no faxing. Lender won’t ask you to submit any collateral to take out a loan. As opposed to bank loans, when borrowers have to provide a bank with some guarantee, like car or house possession papers, online payday loans have no such requirements. Therefore, it makes them riskier for lenders, and because of this, payday loans are of smaller amounts and have higher interest rates.
Thirdly, the size of payday loans is determined by the fact that these loans are usually taken to cover immediate financial difficulties and they should be paid off with the next paycheck. As payday loans are relatively smaller, they can be returned quickly.