Instant loans, are short-term loans for small amounts and sometimes referred to as Payday Loans or Installment loans. All you need to provide an employment record and proof of income. Although the term of Payday Loan is used, these loans are really short-term loans that are not necessarily a direct reliance on the borrower’s next paycheck. There are heavy regulations in place for payday loans.
It’s a Booming Business
The success of these payday lenders is because they offer a service that was not available before. Lenders are quick to point out that they are offering emergency cash loans as an alternative to the more conventional ways to borrow money.
Tech-savvy consumers who have been raised with social media can use their smartphones to apply for a small loan. The money is transferred to the applicant’s bank account within minutes.
Compare the Loan Types
If you factor in the APR as a yearly rate, these short-term loans seem expensive. Payday lenders prefer to compare their loans to products like overdraft fees and other charges that banks use to get back their funds. Some payday loan companies consider themselves a sort of internet service that connects borrowers with lenders.
Traditional lenders for small loans are not only hard to find but require reams of paperwork. These Payday Loan lenders have stepped in to fill the space. You can apply for a loan day and night, seven days a week and the system is fully automated. The borrower may never even have to speak to another person. Once applicants have proven themselves to be reliable with repayments, and find that they need another emergency loan, some lenders might just require the borrower to text the loan amount, the loan term, and the money is made available instantly.
The High Interest Rate
Whatever the reason is, you’re short of cash, so the interest rate, while high, is not something a borrower is going to worry too much about. No credit card and your family and friends are not in a position to offer assistance. What do you do?
Your choices are limited and in this position, you don’t have a lot of options other than to approach a lender for an Instant Loan. The loans are usually unsecured, so that means the borrower has no collateral. The lending company is taking all the risk to offer this cash advance. If the borrower defaults, the lender has nothing of value to offset the loan amount. This scenario is compensated for by applying very high-interest rates.
The rules and regulations regarding how much interest may be charged and limits on the amounts of the loans vary depending on the state, province or county where the borrower is located.