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Payday loans refer to small, unsecured short-term cash loans that help borrowers tide over their immediate cash needs, till they receive their next salary. Though it is a small amount which is granted, still the interest rate is quite high, normally in the range between 30%-50%.

What are Payday Loans?

  • Payday loans are small unsecured short-term cash loans meant for the working class to meet their immediate financial needs, till they receive their next salary
  • Convenient for meeting urgent cash needs like monthly bills, medical emergencies, paying school fees, urgent house repairs, etc.
  • Does not require any collateral or guarantor
  • Even a person with a bad credit history or a low credit score can avail of a payday loan
  • Repayment tenure ranges from 7 to 60 days, normally to be repaid by the next payday of the borrower
  • Entails high risk so interest is on the higher side at around 30% - 50%
  • Can be availed through online and offline 

How Do Payday Loans Work?

  • The form has to be collected from the respective lender bank or their online portal
  • Fill the form with the requisite information and submit it  
  • Keep the required documents ready, as deemed necessary by the respective lender
  • Wait for approval of the loan by the lender
  • After loan approval, the lender asks for requisite documents 
  • Submit required documents like proof of income/identity/age/address/employment
  • After documentation verification, the loan amount would be credited to the borrower account

Eligibility Criteria for availing Payday Loan

For anybody to get a payday loan the following criteria have to be met by the borrower

  • Should be of at least 18 years
  • Should be a citizen of India
  • Should have a regular source of income 
  • Should have an active salary account
  • Should have an active phone number
  • Mandatory requisite documents

Points to Keep in mind, before Choosing a Payday Loan

Payday loans help the working class meet their urgent short-term financial requirements.

Though easily available, they come with high interest rates. 

So, make sure to calculate all the costs involved, to decide if it’s the right choice for you.

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