The name Pay Day Loan itself explains the meaning of the term. Pay Day Loans are short term cash advances for salaried people in need of immediate cash, which they are supposed to pay off by their next pay day. It is due to the same reason why this loan is also known as Paycheck Advance. Pay Day Lenders lend the money to the borrower against a credit card, post dated check or authorized electronic access to the borrowers bank account. The Pay Day Lender holds the check until the borrower pays off the entire loan along with the interest on his/her next pay day. On the event of the borrowers inability to return the money in full on his pay day, the Pay Day Loan companies are more than happy to provide him an extra time frame till his next pay day against a payment of an extension fees. Pay Day Loans normally have a cycle of about 15days hence an extension fee elongates the borrowers repayment time frame for another two weeks. Extension fees are not meant to reduce the balance of the repayment; it is just a fee to buy the borrower some extra time to repay the Pay Day Loan, nevertheless in the mean time more interest and late charges are accrued on the account so every time the borrower delays to pay off the entire balance the repayment amount keeps on increasing.
Pay day loan companies normally ask for a post dated check or electronic access to the borrowers bank account, a pay stub to do a job and salary verification and an identification of the borrower to approve a Pay Day Loan but some Pay Day Loan companies might not do a job verification on producing the pay stub to make the lending process faster. Once the borrower qualifies for the Pay Day Loan the Pay Day Loan companies transfer the cash advance to the borrowers bank account. The borrower in need of quick money does not realize the consequences of taking the pay day loan, thus falling into the trap of Pay Day Loans to keep on paying money to the Pay Day Loan companies to pay off the ever increasing debt with expensive, exorbitant three figured interest rates along with the late fees and extension fees. The cycle continues as the borrower continues to take more Pay Day Loans to balance the shortage of money on his/her pay check due to payment to the Pay Day Loan companies. Finally, after being churned to pay off the Pay day loan companies from every pay check the borrower decides to stop paying the pay day loan companies who now use the borrowers post dated check or the electronic access to his bank account to take out the money without even seeking permission from the borrower who has already legally authorized them to collect the money while taking the loan so now the vicious cycle is completed leaving the borrower helpless and at the mercy of the Pay Day Loan companies. On top of that the borrower is also at risk for overdraft charges on the bank account if the sufficient funds are unavailable when the pay day lenders drop the check. Now the borrower is forced either to pay off the huge sum of money that the Pay Day Loan companies ask or go into a monthly repayment plan with the pay Day loan Lender. At the completion of the repayment the borrower ends up paying five times more than what he originally borrowed.
In order to protect the consumer from the aggressive Pay Day Lenders and limit them from charging exorbitantly, the US Government has framed some laws for pay day lending which varies in different states. At present pay day lending is legal in 37 states however the severity of the pay day lending laws lays at the discretion of the states regulation act on Pay day Lending. Storefront Pay day lending is comparatively more strict and legal compared to online pay day lending since they abide by the state laws but it is not possible to efficiently regulate the online pay day lending companies as they mostly commit fraudulent activities and do not have legal existence.
If you are trapped in the vicious cycle of repeat borrowing from Pay Day Loan companies dont force yourself to submit before the aggressive collection procedures and calls of the Pay Day Lender. Stop, think and do some research on the threatening Pay day Loan company as to find out whether they are doing the business in accordance to the states pay day lending regulatory act and if their existence is legal or not. If you find that your Pay day lenders existence is not legal and are doing illegal business report it to the Attorney Generals office as they cannot force you to pay them by scaring you of legal actions neither can take out money from your bank account illegally when they themselves are doing illegal business. You can always consider the option of Pay day loan consolidation through a reputed and dependable company like My Debt Consolidation Care to deal with the Pay Day Lending companies. My Debt Consolidation Care effectively consolidates your Pay day loans thus saving you loads to money and helps you to come out of the Vicious Cycle of Pay day Loans.