Cash Loan Facts 2019-2020 and 2018

It’s difficult to prepare for the unexpected or an emergency. When they hit, people turn to emergency cash loans to pay for them. Banks used to be the only source of such loans, but today personal loan lenders are everywhere. What do borrowers need to know about personal loans?

How Do Personal Loans Work?

Personal loans are installment loans. Borrowers ask for a certain amount, fill out the application, upload their documentation, and the money is in their checking account within 24 hours. The loan is repaid in monthly installment payments including interest. Repayment can take from two to six years.

The most important part of cash loans is knowing for what you need the money. Depending upon the nature of the need and the borrower’s financial situation, cash loans might not be the best idea as opposed to other types of loans.

What Are Payday Loans?

Another type of personal loan is payday loans. The borrower borrows money and repays it with his paycheck the next week. The trouble with payday loans is that the fees for the loans and interest run as high as 400 percent. Borrowers often have trouble repaying so much money. They dig themselves a deep hole trying to pay it all back.

The Consumer Financial Protection Bureau advises borrowers to read very carefully the loan agreement, calling upon their state’s state regulator or attorney general’s websites for any explanations.

Legalities Of Payday Loans

Each state has its own regulations and prohibitions regarding payday loans. Eighteen states use caps, lower rates for longer terms, and other prohibitions to protect borrowers. Online payday lenders are restricted by their state’s rate caps and prohibitions.

Borrowers and potential borrowers may check their state’s rules and regulations here. This site will tell borrowers in which states payday loans are called racketeering and therefore prohibited Maryland and Georgia, for example.) It will tell borrowers which states allow sky-high amounts to be borrowed (Alabama and Utah, for instance,) and which are rigidly controlled (Maine and Colorado.)

Credit Scores Aren’t Important

Cash loans lenders pull borrowers’ credit reports. However, they only look to see that loans have been repaid, bankruptcies are not in the cards, and the borrower has a job and can repay the loan. Yes, the borrower will get a “hit” on his credit report, but he shouldn’t have trouble getting his money.

Bad credit is defined as a credit score below 580 to 650. Bad credit or no credit personal loans will have higher interest and steeper fees, due to uncertainly the loan will be repaid. Borrowers won’t be able to borrow much.

Loan Fees

Pew Charitable Trusts is an independent research entity. Its findings on payday loans and personal loans are as follows:

Twelve million Americans take out payday loans totaling $9 billion in fees

Most payday loan offices charge $55 for two weeks on a loan of $300

Seven out of ten Americans use payday loans for rent and utilities

Payday loans are so unaffordable that borrowers take them out more than ten times each year

Pew research found that borrowers don’t want to use payday loans again. The people know they’re there if they need them, which makes it all too easy to fall into that trap. Thirty-six percent of payday loan borrowers want regulatory changes to the loans. Storefront loan borrowers would borrow again, they say, because it’s so easy to do. Most all are relieved when the storefront loan offices are gone.

Widespread

In 2018, there were 13,905 McDonald’s in the United States. There were 14,606 Starbucks in America last year. Today, there are almost 37 million personal loan accounts in America. This means that there are as many if not more personal loan offices than McDonald or Starbucks.

Around 48 percent of borrowers had borrowed ten times, while 14 percent had borrowed more than 20 times. Fees repaid were an APR of 300 percent.