What Is Payday Loan by definition?
The Payday Loan contract has a certain flexibility which appeals to both the borrower and the lender itself. Unlike other types of credit, the Payday Loan does not require heavy management fees for a creditor establishment.
Definition of Payday Loan
As the name implies, a Payday Loan is largely personal. Its subscription does not in fact require proof of use on the part of the borrower. The latter is free to use the desired amount, made available as he sees fit without being, among other things, obliged to present a purchase invoice.
The Payday Loan belongs to the category of consumer credit but it has the specificity of being unallocated. Unlike an earmarked loan, it confers great freedom of use by covering a wide variety of highly varied expenses. It can be used to get out of an urgent financial embarrassment, to finance the purchase of a household appliance or the acquisition of a car, etc. It is also possible that this type of credit will be used to supplement budgets reserved for holidays, studies, taxes, etc.
Characteristics of Payday Loan
A Payday Loan constitutes a tailor-made cash offer available immediately within 24 or 48 hours following the request for credit. Depending on the borrower’s needs, he may have a sum of up to $ 75,000 according to the Cogilaw Company. The amount of the loan that can be granted is therefore very variable, the repayment duration for its part, is between 3 months to 5 years or even 7 in some cases. The rate and monthly payments of the Payday Loan are fixed and not variable.
Taking out a Payday Loan must be done in writing. The content of the contract must include mandatory information common to all loans. Namely the APR or total effective rate, the total cost of the credit without forgetting to indicate the repayment period as well as the amount of the monthly payments.