Payday Loan
x
Payday Loan? What is the difference between a payday loan and a deposit advance? Payday loans and deposit advances are high-cost short-term loans. Some of the main differences between them include who gives the loan, how the loan is requested and how it is paid.
Payday lenders give loans online or to people who visit their points of sale. By contrast, banks and credit unions that offer deposit advances usually offer them only to their customers who have accounts with them and who meet other eligibility requirements. Usually, a payday loan must be repaid the next payday of the borrower, which is usually two to four weeks after the loan was made. The specific due date is established in the payday loan contract.
The borrower can either go back to the payday lender to repay the loan or allow the lender to withdraw funds from a checking account.
With deposit advance, banks and credit unions usually pay themselves automatically when the next electronic deposit in the client's account is made, regardless of the source, which could be well before two o'clock. four weeks.
If the amount of the incoming deposit is not sufficient to pay the loan completely, the bank or the credit union will be paid from the subsequent deposits. In general, if there is any remaining balance on the loan after 35 days, the bank or credit union will charge the remaining balance of the customer's account, even if this causes an overdraft in the account.
Both payday loans and deposit advances charge fixed fees that are usually much higher than those of many other forms of credit. A typical two-day payday loan with a commission of $ 15 for every $ 100 borrowed is equivalent to an annual percentage rate (APR) of almost 400%.
