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What is Payday Loan? Read on how to navigate the world of short-term financing responsibly. Discover tips, features, and risks involved with Payday Loans
In today's fast-paced world, with rapid technological advancements and ever-changing social norms, balancing our finances is a huge task.
Payday loans are short-term, high-interest loans that borrowers repay on their next payday. They are typically used to cover unexpected expenses, but can be expensive due to high interest rates.
They are popular because its easy to obtain and are accessible to a wide range of people. You will learn everything you need to know about Payday loans in this article.
What is Payday Loan?
A payday loan can be the ultimate saviour if you are going through a financial crisis.
A Payday loan is an unsecured loan given for a short time, usually taken by customers before their salary for the next month is paid. Different countries and states may set a limit on the loan amount.
You can avail of Payday loans through an offline or an online mode.
These loans typically have high-interest rates, yet they are nonetheless chosen by clients because they do not require a guarantor.
Payday loans can be obtained by someone with a bad credit history.
Main Features of Payday Loans in India
- It is a short-term credit loan whose mechanics depend on where you are taking the loan from. You can either repay the amount in full or in instalments.
- Payday loans are usually taken for a short tenure. The due date for the repayment of the loans is usually 2 to 4 weeks and the repayment date starts from the day the loan is disbursed.
- The loan amount is available to you in cash, cheque, and other different payment methods.
- The best part of Payday loans is that the loans are processed quickly and you do not have to worry about your loan request being rejected. Even if you have a bad credit history, it won't be an issue for your Payday loans to get approved.
- Payday loans are unsecured loans hence you do not need to provide any guarantor or collateral as security. While this may act as a relief, it also increases the risk factor.
- Payday loans are often associated with exorbitant interest rates.
- Some companies may also charge a late payment fee and hidden added fees.
- Your salary plays a big role in the approval of your loan amount. The higher your salary amount, the higher the chance of a greater amount being disbursed.
- You can apply for Payday loans in quick and easy steps. Minimal documentation is needed for approval.
- In India, You can get your payday loan online instantly by applying from online apps and websites of a certain company. That is why Payday loans are also known as instant advances.
- Payday loans usually do not have pre-payment or part-payment fees.
- Payday loans can be used for any purpose. The lender won't ask you how the money is being spent.
How do Payday Loans work?
You can get a Payday loan in super easy steps. In this article, we will guide you on how to avail of a Payday loan swiftly and conveniently.
Eligibility criteria for Payday Loans in India
Although the requirements for a Payday loan in India vary from lender to lender, however, there are certain common eligibility criteria that must be taken into account. The borrower-
- Must be at least 18 years of age
- Must be an Indian citizen
- Must have a full-time job and a regular source of income
- Must have an active current bank account
- Must have an active phone number
- Must have all the necessary documents required for approval.
Documents required for a Payday Loan
- Identity proof such as an Aadhaar card, voter ID, passport, driving license or any other official proof of identity.
- Address proof such as an Aadhaar card, passport, driving license or any other official address proof
- Age proof
- Proof of income
- Letter from employer
- Passport size photograph
How to apply for a Payday Loans in India?
You can apply for your instant Payday loans in India in seven easy steps.
Step 1 - You need to collect the form from the nearest branch of the lender or the company. Alternatively, you can also collect the form from the online portal.
Step 2 - Carefully fill up the form and proofread it. Add all the required details and submit it.
Step 3 - Submit all the required documents which are necessary for the approval of the loan
Step 4 - Know the estimated amount of time for the loan to get approved and then wait.
Step 5 - Once your details are verified and the loan application is approved, the lender will ask you for additional required documents.
Step 6 - You need to submit all your essential documents such as income proof, address proof, age proof, the letter from your office which proves that you are an employee at that company and other documents (which vary from lender to lender)
Step 7 - Once the documents have been verified, your loan application is officially and finally approved. The amount shall be disbursed to your bank account after that.
Why are Payday Loans bad?
Payday loans are often risky because-
- Urgent Payday loans are often provided for a short tenure hence they become an additional burden in times of a financial crisis.
- The borrower must have proof of a regular source of income with full-time employment, although certain lenders provide Payday loans to workers working part-time, however, it varies.
- If you are applying for a payday loan in India through an online portal, the chances of the scheme being fraudulent increase. Please check and verify all the information of the lender Before applying for a loan.
- Payday loans in India always have a high annual percentage rate thus the customers have to pay a high amount as interest. Charges associated with these loans are also pretty high.
Payday Loans Providers in India
You can avail of payday loans online too! Some Indian payday loans online are-
This company offers short-term credit payday loans in India. These loans can be availed by both individuals and Indian businesses which often require payday loans for functioning.
This lending facility mostly operates in cities like Gurgaon, Delhi, Mumbai, Hyderabad and others. Some of the key features of their scheme are-
- Smart and safe processing
- Easy repayment facility without any difficulty
- Easy application procedure
- ATD Money
They are one of the best lenders in India and it operates through an online payday loans mobile app.
Although they are not a Non-Banking Financial Company (NBFC), however, it is an intermediary platform that enables customers to get loans from NBFCs in India. Some of the salient features of this lender are-
- You can get instant loans up to Rs. 50,000/-
- Easy and quick loan disbursement procedure
- No repayment charges
- Convenient interest rates, where you only need to pay the interest on the amount that is disbursed and the number of used days
- The interest rates are approximately between 0.1% to 0.2% per day
One of the best parts of this lender is its convenient repayment tenure with a minimum of 70 days to a maximum of 180 days. It provides a safe and secure procedure as well. Some of the key features are-
- Instant payday loans disbursement
- The MIM club
- Low and suitable interest rates
- Easy application process
FAQs about Payday Loans
1) Can you get a payday loan without a Bank Account?
Answer: Yes! You can get instant payday loans in India without a bank account.
However, it comes with a catch. When you do not have a bank account, lenders often charge higher interest rates on the borrowed amount. Sometimes when you do not have a bank account, the lenders will ask you to show a prepared card account.
2) Are payday loans fixed or variable?
Answer: Payday loans are known to be fixed-rate loans. This is because you need to repay the amount at the fixed interest rate which you have agreed upon during the approval of your loan amount. The interest rate does not increase or decrease.
3 )Are payday loans secured or unsecured?
Answer: Payday loans are always unsecured.
4) Why is it called a payday loan?
Answer: The term “payday” in Payday loans refers to the day on which the employees or the workers receive their pay from the employer organization. Workers usually receive their pay on a weekly or monthly basis.