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Payday lenders offer sub-prime loans that are short-term and carry a higher interest rate (APR or annual percentage rate) than long-term
loans. This interest rate is also called the finance charge and is added to the amount of the loan at a fixed dollar fee. The company must disclose this fee to you, the borrower, up front.
Spotya! Cash is an online payday lender with loans that directly deposited into the borrower's bank account. The application process is completed online and the approval process conducted by the payday lender is not complicated. A bank statement must be faxed to Spotya! Cash or emailed. Spotya! Cash does not do a credit check, but confirms the personal and banking details the applicant provides.
Payday lenders advertise "unsecured" loans, meaning they need no collateral. They also call their loans "payday loans" or "cash advances." With a pay day loan, the borrower pays back his debt when he or she gets the next paycheck. Some lenders, such as Spotya! Cash, debit the borrower's account automatically on the payday.
In recent years payday lenders have become more numerous, because of the difficult economic times we live in. Payday lenders have extended risk selection standards; the person borrowing the money is not as thoroughly investigated by the payday lender as are applicants for a longer- term loan.
Payday Lender Practices
Payday lenders offer loans that are regulated at the state level. But in October 2007, a law was passed that caps the interest rate on a payday loan for military personnel at 36 percent APR, as defined by the Secretary of Defense.
They are sometimes criticized as "predatory" because some payday lenders charge excessive interest rates and penalty fees and these are sometimes hidden from the public or not clearly disclosed. Spotya! Cash is a payday lender that has no hidden fees and makes every effort to work with a borrower who is unable to pay back the loan on the given date.
The finance charge of payday lenders can run anywhere from around 200% to 1000% (see State Rates).
What is a payday lender?
A payday lender is an insured depository institution. The borrower provides the payday lender with an authorization to debit his or her account for the amount of the loan plus the fee. The payday lender expects to collect the loan when it is due by debiting the borrower's account for the money. The loan can be refinanced when the borrower does not have the funds in the account to repay the loan, but an additional fee is charged by the payday lender. Because some payday lenders also have penalty fees when the bank account has insufficient funds to repay the loan, it's important that a borrower research various payday lenders and compare their fees. An honest payday lender will make every effort to avoid having their client get into a further money trap.