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Don’t almost all of us these days, hear about free payday loans all the time? We find this term everywhere on the Internet. There are advertisements in the offline world as well. What exactly are these loans? To understand this, you will first have to know what a payday advance loan is in the first place.
A payday advance loan, as the name suggests is a cash advance that is offered to cover your urgent expenses till your next payday. You are supposed to return the money, plus the interest once you have received your next salary or income. The maximum loan amount that is offered is equal to or less than $1500. So this means that payday loans are small cash advances that are offered for short periods of time. Usually, the term of the loan is not extended. There are a few exceptions though where the lending company will agree to allow you to repay the debt over a longer time.
So now that we know what a cash loan is, let us now see what free payday loans are.
Free Payday Loans – The Two Types Explained
There are usually some charges for getting the loan. It could be a processing fee or a finance fee that you have to pay the lender. You have to pay these fees at the time or repayment. So when you are paying back the debt, you will have to pay off the amount you took as the loan, the interest and also this fee. A loan that is free will waive off this fee. This is a great thing because the interest rate for these loans is very high. So you should make a serious effort to reduce your payments as much as you can.
There is another type of free loan. Here, the lending company will waive off the interest. This plan is offered to customers who haven’t taken a loan before. So, payday loans for free of this kind let you pay back just the loan money you took and nothing more.
But the latter is very difficult to get. The reason quite simple – post-recession every business has started looking ways to make more money and cut expenditure to save money. Cash loan industry is no different. The lenders who earlier were more than happy to offer a free loan in entirely (interest and fee both waived off) to their first time customers are no more doing that. However there are lenders who still offer free payday loans to some customers where their loan fee is waived. This is a great help to people looking to get cheap payday loans, since they pay a less amount when their loan is due.
Let’s take an example. Suppose a lender offers a loan of $500 at $125 interest for 14 days and a loan administration fee of $25. When they offer a free payday loan, the lender will actually deduct the fee and take back only $500+$125 = $625. You can save $25 on this loan.
Raina has done a lot of research in micro-financial products. She works as a freelance journalist and specializes in finance vertical. She also has a lot of interest in payday loans and personal finance industry and writes a lot about them. Currently she is writing for Payday Cash Loans .