Sometimes, the terms associated with payday loans, or any other
loans for that matter, can be confusing and difficult to
interpret. The purpose of this directory is to help assure that
anyone who is shopping for a payday loan has the right tools to
cut through the rhetoric and come away with a clear
understanding of what each associated term means.
Annual Percentage Rate (APR) - The annual percentage rate is
defined as the cost of credit to the borrower in relation to
the amount borrowed, expressed as a yearly rate. On mortgage
loans, for example, lenders are required to disclose the APR,
which also includes other loan costs such as points and loan
fees that would be paid by the borrower.
Payday loans - A payday loan is a short-term loan, advanced for
two weeks or a month, until an individual's next payday. It is
also called a cash advance, a check advance, a payday advance,
a cash loan, etc.
Payday loans online - Payday loans online are those which are
transacted completedly through electronic means. In other
words, the applicant doesn't have to go in to the office or the
bank to apply for the loan, but can do so from his or her own
computer. Online loans are also referred to as online payday
services.
Loan fees - The amount the lender is allowed to charge for the
borrower's privilege of receiving the loan. Loan fees can be
flat fees (i.e., $15 per $100 borrowed) or a percentage rate
(such as 6.5% of the total borrowed). In any case, the loan
fees are tacked on to the amount borrowed, so that if a person
borrows $100 at a flat rate of $15 per $100 borrowed, the total
amount due to the lender on the due date would be $115.
No faxing - When payday loan offers first began to appear on
the Internet, part of the application process was faxing
documents like paystubs, checking account statements, etc. to
the lender. In some cases, when the loan was approved, the
borrower received a check by fax, as well. Today the loan
companies are advertising 'no faxing' as an additional
incentive to borrow from their company, since everything is
done through a quick Internet application and no documents have
to be faxed, making the turnaround time much less.
Amount financed - The amount financed is not just the amount
borrowed. A borrower may, for example, request and receive $100
from the lender. However, the amount financed includes both the
amount borrowed and the costs charged by the lender for the
loan. If, for example, the lender charged 10% for a 14-day $100
loan, the total amount due back to the lender in two weeks would
be $110 - or the amount financed.
Finance charges - Finance charges are similar to loan fees -
the amount of money that is charged to the buyer for use of the
lender's money for a specified period of time. The finance
charges may be expressed as a flat rate (i.e. $15 per $100
borrowed), or as a percentage rate (i.e. 10% of the total
amount received by the borrower).
Total payment due lender - Total payment due lender is another
term for the amount financed. It includes both the amount
borrowed plus any finance charges or loan fees.
Secured loan - A secured loan is one for which the borrower
signs over title to some sort of collaterol that the lender can
collect and use as repayment if the borrower fails to pay off
the loan in the specified time frame. Title loans are secured
loans. The borrower turns over his or her car title in exchange
for receiving the loan. If he or she is unable to pay back the
loan, plus loan fees, within the designated period of time, the
lending company can seize the borrower's car and sell it to pay
off the loan.
Unsecured loan - An unsecured loan is one for which no
collaterol (property of one kind or another) is required. A
payday loan is an unsecured loan that is guaranteed only by
either a post-dated check issued on the borrower's bank account
and dated for his or her next payday, or by an authorization to
withdraw the amount financed from the borrower's checking or
savings account on a specific day.
Bad credit loan/bad credit cash loan - A bad credit loan is
just another name for a payday loan or cash advance. Generally,
these types of loans are available without a credit check, so
that even individuals with bad credit, or no credit, can
qualify.
Roll over - When a loan is 'rolled over' that means it is
refinanced for another period time such as another two weeks or
an additional month. The lender usually charges the same fee to
roll the loan over as is charged to obtain it in the first
place. For example, if the borrower agreed to pay $15 in loan
fees for a $100 loan for two weeks and needs to have an
additional two weeks to make a full repayment, the lender would
charge an additional $15 to carry the loan for the additional
period of time.
Licensed lenders - Some payday lenders are licensed to operate
in the state where they are doing business and some are not. As
a precautionary measure, the borrower should make sure the
lender is licensed.
About The Author: Max Hunter is the author of many credit
related articles. If you are looking for help with Payday loan
or any type of faxless loans please visit us at
http://www.PaydayLoanChoice.com
