If you do not have any money set aside for emergency situations, you are not alone. According to Bank Rate, 24% of adults in the United States do not have any money saved for emergencies. Many people in this situation are unable to save money for emergencies because they live paycheck to paycheck. Market Watch says that half of all American families are living from one paycheck to the next.
When money is so tight that you cannot save for emergencies, what do you do when a financial emergency comes up? Most people in this situation have poor credit and, therefore, are unable to qualify for traditional bank loans. This is why payday loans are usually considered. Here's what you need to know about payday loans.
Payday Loans Do Not Require a Credit Check, but Be Sure to Repay on Time
Payday lenders do not pull your credit report. Traditional banks do so to assess whether or not you will be able to repay a loan based on your credit history. Payday lenders do not require this because they secure the repayment with your checking account information. Essentially, you give them the authority to remove funds from your checking account on the due dates they provide to you.
However, payday lenders may report late payments and failure to repay the loan to the credit reporting bureaus, which would affect your credit report. Therefore, you'll want to be sure you are able to repay the payday loan before you take one. Since you are already living paycheck to paycheck, you'll need to consider what would happen if you run into another financial emergency in the meantime. Should this happen, it would be a good idea to contact the payday lender right away as they may be able to give you an extension.
Payday Lenders Require Checking Account Information
One thing that is important to understand about payday loans is that repayment is made by giving the lender access to your bank account by giving them your checking account routing and account number. So what do these numbers mean, exactly? These numbers are located at the bottom of your checks and are used by banks and creditors to send and receive funds.
The first set of numbers at the bottom of your checks is the routing number. This is a 9-digit number that tells which bank you use. The second set of numbers is your account number, which tells the financial institution which account the monies will be deposited to or withdrawn from. The last set of numbers is that check's number. The payday lender will request these numbers to properly identify where to send your payday loan to and where to withdraw the repayment from.
Payday Loans Are Quickly Approved and Quickly Paid Back
One of the main reasons payday loans are highly considered by people in dire financial straits is that, upon approval, the money from a payday loan can be in your hands in just several hours, when you need it the most. Payday loans are quickly approved and also quickly repaid. Essentially, a payday loan is an advancement of your next paycheck or two depending on the amount of the loan you qualify for.
This means that you will likely need to adjust your budget since you already live paycheck to paycheck. Eliminate as much of your discretionary spending as possible during this time. If the repayment schedule will affect your ability to pay your other bills, contact those creditors to see if you can delay payment or reassign your current due dates, such as having your payment due on the 15th instead of on the 1st. Do this especially if you have automatic payments that are set during your payday loan repayment time. That way, you can be sure that no other bills will interfere with your payday loan repayment. For more information, contact a business such as Payday Express.