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Emergency Payday Loans - What You Need to Know

Updated on September 14, 2015

Emergency payday loans can help out people who need money very quickly. In fact, people can get an emergency payday loan within hours to a couple of days if funds are needed. Sounds great, right? However, when something is too good to be true then it generally is and with that said, it can be also stated about emergency payday loans that have taken the globe by storm. Sure these “guaranteed payday loans” are convenient and quick but they are also very costly with high interest. Many people have gotten themselves into financial disasters over these types of quick loans – as a result, many states and countries have already banned this type of lending to prevent consumers from abusing them and to protect debtors from predatory lending practices.

Trivia: Did you know that there are companies that are emerging who now offer virtual “payday” type loans through text messaging on cellular telephones? Companies like TxtLoan, based in the United Kingdom have started this virtual lending option.

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Emergency Payday Loans - What is This Type of Loan?

Emergency payday loans are essentially short term loans that are very high in interest. This type of loan option is generally geared towards those who are low income, cash strapped individuals, and people with bad credit. They are often a last resort when individuals need to come up with money very quickly. Emergency payday loans are not stipulated for what they can be used for, as they are similar to a personal loan; however, interest can be as much as six hundred percent higher than a traditional personal loan. Payday, or cash advance loans are generally paid back within two weeks to a month when an individual gets paid from his or her employer. People with poor credit and cannot get a credit card or small loan are the biggest debtors of emergency payday loans.

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Benefit of an Emergency Payday Loan

There is actually only one benefit to taking out an emergency payday loan – they are quick to get when needed. The whole entire process can take anywhere from an hour to a few days (if a bank wire transfer is needed). Individuals seeking out emergency payday loans should exercise caution when doing so. As stated before, these loans can be very high in interest; therefore, payday loans should only be taken out if absolutely necessary. What would be considered necessary for these types of cash advance loans? If an individual’s car breaks down and needs it to get to work then it would be an acceptable excuse to get a cash advance. The person needs his or her car to earn a paycheck, without the car then how would the person get to work? Money is needed to fix the car and without any money to do so then a payday loan is acceptable. 

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Negative Aspects of Guaranteed Payday Loans

As stated many times, guaranteed payday loans should be a last resort due to the high interest that comes with this type of lending option. Many individuals get themselves into a terrible financial mess when they cannot pay the payday loan off when the due date arrives. These individuals will then take out another cash advance to pay for the previous loan and then the debt circle spirals out of control. Finally, after taking out a few “emergency payday loans,” these people cannot keep up with the financial mess. They end up defaulted on all of them.

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Instant Online Payday Loans - Companies

Companies that issue payday loans via online generally advertise their services and products through e-mail, different types of advertising products by large internet ad companies and through online media outlets. Online companies are usually set up with internet on screen forms or require individuals to print off an application and fax their information in. Roughly all instant online payday loan lenders require individuals to verify their income by sending in several paystubs via fax and - or banking information. The companies require an individual to give other information – social security number, incase the debtor refuses to pay the cash advance back, banking account number and bank routing number to wire funds and proof of residency. 

States That Ban Cash Advance Company Lending

There are currently about thirteen states that outlaw the practice of consumer cash advance lending by companies. Companies that are situated in the states of North Carolina, Arkansas, Georgia, Maryland, West Virginia, Pennsylvania or in the North Eastern states – MA, ME, NH, NJ all ban so-called pay-day loans. Some states have certain types of laws in place that regulate the payday loan industry in their jurisdiction, where as individuals are not allowed to borrow more than one or two loans at a time. Many states are working towards a unified data based so that lenders have to keep track of cash advance loans that are given out by each licensed institute. In Virginia, there is a limit to the amount of cash advance loans that individuals are allowed to take out in any given year.

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