Are Payday Loans Secured or Unsecured Credit?

A payday loan is nothing more than short term cash offered against your next paycheque, it is also an unsecured form of credit as you do not need to put up security, such as your home, as collateral. The loan is judged on your ability to repay the loan and not your ability to offer assurances in the form of collateral.

The ability to apply for payday loans through Internet websites has taken the guessing work out of fast cash, and that’s because any working person can now get approved faster, easier, and more affordably than ever before (in the history of mankind). And what a slow history it has been:

• Up until about 15 years ago payday loans were only available through pawn shops and neighborhood loan sharks. There was no regulation because there was no real market – financial transfers between banks were far to slow, and banks simply would not lend short term, low-amount check advances.
• Then the Internet came along and made everything faster – bank to bank transfers, bank to your personal account transfers, and ready information to get the word out about online payday loans.
• Once the ball started rolling there was no stopping the acceleration in lending speed to its terminal velocity. Online lending was the first step after the online revolution, then the background checks were made streamlined and anyone with a job could apply for and get funded with minimal effort and even less actual fuss.

Unsecured credit judged on present circumstances

With increased lending speed borrowers are able to access the cash they need quicker than ever.

Need some quick money before payday? Well shucks, I’ll just apply for some online and be living easy. An advance that takes a matter of hours to get, does not mean that you should not consider your options. Once again, if you get cash advance loans, pay them back on time, otherwise you are just throwing away YOUR money.

Repaying the loan

Most lenders will give you the opportunity to set up an instant repayment plan. Online lenders will require a direct deposit feature on your bank account to use their services, and that same feature can be used in the opposite – on the day of repayment you make the signal and your lender can take out their funds just as easily once your paychecque is in the bank. So repaying your advance in itself is probably easier than applying if it weren’t doggone reality:

• The reality is you need that money, you need every time coming to you every payday simply to survive until the next. You can’t afford to pay off your entire advance with your first paycheque, and you don’t have to.
• Lenders offer the beneficial roll-over services, and you can delay repayment by paying another fee on top of your original charge. There’s the cushion, right there is the financial pressure release – and the majority of all advances go into some form of delayed repayment using roll-overs.

While rolling over your advance for another two-weeks might sound like a great benefit to you, it will actually serve to pull you ever deeper into your personal financial debt.

Deferred payment creates debt

There are no cost-effective repayment plans for short term loans. If you have a single penny remaining on your balance after your payday, you will be charged a roll-over fee, and in almost all cases that fee will be the same as your initial charge regardless of the amount remaining:

• Imagine you took out a £200 advance and were charged £25 per £100 you borrowed, or £50.
• Rolling over that advance at your next payday will cost you another £50, so you’ve already paid £100 for a total debt of £300.
• On your next payday you take a stand and pay £250 toward your payday advance loan – you still have £50 remaining on your balance.
• Instead of charging a reduced roll-over fee in accordance to your remaining amount, your lender will charge you the same fee as your first roll-over – £50. So you still owe £90 on your next paycheque, not bad, but here is the trick part.
• That £250 repayment will make a severe dent in your bank account and financial security. Chances are – with people taking out on average 11 payday advances every year – you’ll need another £200 loan to make it until your next payday.

That is the cycle, and that is why you cannot afford to borrow your hard earned money to lay your hands on your hard earned money before your next paycheque. On the other hand, if you are experiencing a real cash emergency then it may be your only recourse.

What is an unsecured loan?

By definition, an unsecured personal loan is a type of loan that doesn’t require collateral. What is collateral you might ask? Collateral usually comes in the form of property such as a house or vehicle that serves as a guarantee, of sorts, for loans . In other words, if you default on the terms of your loan, the property or “collateral” you have put up can be taken by the loan originator.

So, unsecured loans are simply loans that don’t require any type of a guarantee of payment other than your signed obligation. As with all personal loans, it is important to understand and familiarise yourself with the terms and conditions of the type of loan you choose. Don’t forget that a “loan” is a “loan” regardless of the form it takes.

Do I Qualify for an Unsecured Personal Loan?

All loans require an application process that can be done in as little as a day. Remember, just like grocery shopping when you are hungry, looking for personal loans during a time of desperation is not recommended. You will find that there are thousands of companies that are willing to loan you money based on your credit history, but, if you look at each company separately it will lessen the burden of finding the perfect source for your loan.

What Can I Expect?

When searching for the best fit to your needs, look for loans with conditions that are feasible to your budget. The high of receiving unsecured personal finance can be short lived when the payment schedule is too strenuous for your budget. Companies will readily explain the benefits of their loans when you are at your most desperate. Don’t be fooled, especially if you are in search of a quick solution. Make sure that you ask all of the questions up front and, don’t be afraid to research the company with the Better Business Bureau to make sure that they have a proven track record of ethical lending practices.

In searching for your own you can expect a variety of interest rates and terms. Expect to pay interest rates upwards of 8 or 9%. Depending on the amount of you have requested, pay back periods can range from 12 to 84 months.

Don’t forget to do your due diligence as you would with any financial endeavor.

Feeling the pinch?

The three main reasons someone utilises online lenders:

1. Out of funds
2. Want to treat yourself to some new furniture or furnishings
3. Struggling to make ends meet and need some cash to live on

If you are not a homeowner or simply do not want to have a loan tied to your assets, you may want to consider this option. And sure, everyone would like to find the cheapest deal, guaranteed to work magic on your finances, but its just not gonna happen. The fees are the fees and stop crying about it.

How do lenders determine the lending amount?

The lender will look at your background check, your financial history and employment information to help them determine the size of the loan and the APR.

Is it your best option?

A longer-term secured loan is for someone who is not desperate for a small amount of cash to make it to their next paycheque. If you are in that situation you may be considering an online payday loan. If however you need a larger sum of money that you can realistically pay off over a set time period, you may be a suitable candidate for a personal loan. They can be be expensive however and will hang over you so you should be a financially responsible person who can hold down a steady job and be able to comfortably make payments on your personal loan over the given time period.

As with all loans an personal loan won’t come cheap and if you are not a homeowner or do not want to secure your loan against your assets, a unsecured personal loan may be right for you. Just make sure that you do your research and use a reputable company.

Quick decisions, doesn’t mean making bad decisions

Payday baby – its all about the dough. problem is, when we’re making things Payday or bust is hard to always have the dough for baking. So we pull in the prefab ingredients – a quickie advance to help our finances rise. But baby, when it comes time to repay this you’d better believe your financial goose will be cooked.

No matter how you slice it, living beneath a highway overpass is the greatest – free food, shelter, a continual drone that helps us sleep 10, 20 hours a day. Now that’s living, making it on your own without a helping hand from the candy man. But when you go out looking for fast cash you’re giving up and telling the world that you are ready for bondage:

Its curtains for you when you take out quick cash becuase you’re paying from your paycheque – and the amount on that paycheque is already to small an amount. Mess around with that and your goose – baby – is a-cooked.

Surely it will give you an initial boost into the financial stratosphere. No more cardboard homes or donated dungarees – you’re on a buying spree that won’t end until payday. But then it comes, and you realise that the money you spent costs you more money in start up fees, lender fees, late fees, roll over fees, speed fees and crying fees. There is no joy for the hapless user, just mountains of debt and endless seas of depression.

There is no use crying over empty bank accounts, just as there is really no need to freak out and run to the first loan lender you see. It will only give you that feeling of joy and inner peace for a limited time, and after that time it’s back to the gutter for you. My weary space traveling android with no need for financial aid just a dream of being human. It is only human to want to succeed, to meet your demand in the face and fight back with your mitts. But a quickie loan isn’t yours to throw around, its a temporary cover and those swings you make now will come back when the cover is gone. Beware revenge! Beware of the scorned financial obligations – for they shall always return!

The return of intergalactic warrior robots

Who’s there! Where are they! Where am I? Is this my personal finances or just an advance on my wages? Because I get confused at times – when you use these services too often you tend to fall into some slight delusions. Solar systematic dynamics! The continual battle between symphonics and cacaphony! I am the leader! I am the great loan wrangler – come hither! Come inside! Take a look at my lasso and my spurs — my wonderful, beautiful spurs! have at thee! have at you! Have at the whole universe! …see? Thats what it can do, leaving you confused and washed up. shivering cold beneath the Interstate.

The problem with cash advances aren’t the loans themselves, its the people they target. Hard working, fast spending individuals who have no savings, who can’t afford to have savings, and who might not yet have the abilities to create our own financial answers. Loans are never easy, and when you throw speed and bad credit into the mix you’re bound to find problems.

Fixing the problems

So we know the problem isn’t the loan, but the people who use them. Its on us, now its our turn to put things together and show our real financial strength.

• Apply for online loans only when you absolutely need them – in an emergency, not when you could use the extra cash and not when a shopping spree or a night on the town will; make you a happy consumer.
• Apply only for the amount you need. Just because you qualify for a £500 loan doesn’t mean you need £500, and even if you don’t spend it all you’ll pay for it all.
• Spend your money in the right places. Thankfully advances are directly deposited into your account, so there is no risk to spend cash too quickly or in all the wrong places.
• Finally, commit yourself to a short repayment. Don’t delay, don’t make any excuses that brought you to this bad credit position in the first place, just put the repayment together and do it – worry about the repercussions later.

Wait…what repercussions?

Repaying your cash advance on time and in full have one nasty side effect – you’re left with virtually nothing of your paycheque. Once again, you’ll find yourself in a position where money is tight and assistance is a virtual necessity, and in fact, many people take out a second round soon after repaying the first. But you still have to repay, and you need to do it fast or your demands and expenses will run away from you. Even the best websites, like ours, are sure to prove too difficult to handle – so get ready, get set, and start running now before you even have that cash because you need the head start.