(Newswire.net — November 30, 2021) — The convenience of loans has been appreciated by many people. A sufficient number of people annually apply to banking and other financial institutions in order to obtain a loan. Someone wants to get money in debt to buy something or solve some problems, and some take out a loan for business development. Therefore, a distinction is made between consumer and productive loans. Consumer loans usually are made out for any personal needs while productive ones make a great profit in the long term.
Taking into account loans, microloans are issued not by banks but by microfinance organizations. As a rule, the microcredit amount is significantly lower than the bank loan limit as well as the processing time. A microloan is issued for a period of up to 1 month for an amount of up to UAH 3-5 thousand but there are exceptions.
Microfinance institutions are less demanding of their lenders. They do not require proof of financial condition, income statements, guarantors, or collateral. Furthermore, the consideration of an application for a loan before salary is much faster than in a bank.
If the bank takes several working days to approve or refuse a loan before salary, then the microfinance organization makes a decision in 10-15 minutes. Therefore, many people use microloans as payday loans for urgent needs, like the 500 dollar loans that you can get at https://directloantransfer.com/500-dollar-loan/ in just a few clicks.
How to Choose the Right Loan?
Despite the simplified procedure for obtaining a payday loan from companies such as AmOne, it should be chosen carefully. After all, each MFO has different lending conditions and the possibility of obtaining a loan before salary starting from the amount and ending with the age of the borrower. Some organizations transfer money to the card online comparisons while others give out only in cash at the branch.
If you want to get an urgent loan online or find a microloan at 0%, then we advise you to use trusted credit organizations with a free selection of offers and a comparison of loans. A borrower indicates the required amount and term to see all the suitable loans from MFIs. You will be able to compare their conditions and interest rates, and then go to the organization’s website and issue your favorite offer with a payday loan.
What Is the Peculiarity of Payday Loans Taken Through the Internet?
A microloan is provided on the terms specified in the contract. If the borrower took an online loan from an MFO, then the debt is repaid in the manner prescribed by the lender.
The application is drawn up and considered in the same way as when visiting the office of a microfinance organization:
- the borrower fills out an online payday loan application form;
- the application is processed within 2-30 minutes;
- the microfinance organization provides the final answer.
MFOs only check the passport data for falsification of personal information. They are not interested in the borrower’s credit history.
To check the provided data:
- a call is made to the mobile phone specified in the questionnaire;
- the borrower confirms the authenticity of the specified contacts via SMS.
The check is superficial but the information specified in the application is confirmed. In the event of the formation of debt, the MFO will be able to demand its return within the terms established by the contract. Responsibility is the same as for microloans issued in offices and branches.
Interesting Facts About Payday Loans
-
80% Loans Rollover or Renewed
Four out of five payday loans are either rolled over or renewed within 14 days. Remember the typical two-week loan term. Unsurprisingly, the same report from the Consumer Financial Protection Bureau (CFPB) found that most payday loans are given to borrowers (who renew their loans so many times) end up paying more commissions than the total money they pay. Only 15% of borrowers pay off all their payday debts without re-borrowing during a 14-day period.
-
36% Per Annum to The Military Loan
For loans to the military, the limit is set at 36% per annum. According to the War Credit Act, the Department of Defense (DOD) reported in 2006 that an estimated 17% of military personnel use payday loans. “Predatory lending” undermines combat readiness, damages the morale of soldiers and their families, and increases the cost of deploying volunteers”.
According to the report by the Center for Responsible Lending, the Military Lending Act (2006) which caps the annual interest rate at 36% including all fees prohibits a lender from providing a loan against a personal check, authorization to write off funds, distribution of wages or the name of the vehicle, and the requirement for written and oral disclosure of all interest rates and obligations to repay before payday loan is paid.
-
Borrowers Pay More
The total payday loan is a vicious circle. The circle that causes the interest and commission arrears to exceed the original loan amount. Many get a $ 350 payday loan to help with variable living expenses between paychecks. However, due to sky-high annual interest rates and additional fees, the average borrower pays more than the total amount of the loan received. Thus, for a payday loan of $ 350, the average borrower would pay a commission of over $ 350.
-
Payday Loan Users Are More Affected By Bankruptcy
When payday loan users were compared to similar low- and middle-income households in Detroit that did not use payday loans, DAS found that bankruptcy rates were nearly three times higher. Therefore, eviction rates doubled as well as phone outages and nearly triple the number of utility outages.
In a study from Texas, researchers found that borrowers who received payday loans were twice as likely to file for bankruptcy over the next two years, compared to payday loan applicants who were denied payday loans.
-
In the US Lenders are Up to Pay More Than McDonald’s
At each corner is McDonald’s! But according to NBC News, there were more payday lenders in the US in November 2014 than McDonald’s. McDonald’s had 14,267 outlets and over 20,000 payday lenders. The ease of obtaining a payday loan exacerbates the problem of high-interest rates and predatory lending.