A same day loan can be defined as a small amount of cash that an individual borrows while waiting for the next salary check. Laws regulating such loans may vary amongst 37 American states that consider these loans as legitimate.
The Consumer Federation of America conducted a survey on hundreds of private same day loan companies and revealed that the lenders often charged exorbitantly high APR and the borrowers became the prey of such lenders. To help the borrowers avoid such a situation, many US states have passed legislation to impose limitations on what annual percentage rate (APR) a lending company can claim.
History of same day cash advance
The state legislation of California passed a law to legalize same day loan, also referred to as short-term cash advance, in 1996. Gradually, other state legislation's also passed the same law. And this law has made the loan industry as one of the fastest growing and promising industries in the United States.
Speculation associated with such loans
A same day loan can be received without a credit check. These days, getting cash loan from a traditional institution like a bank or credit union is next to impossible for people with less than perfect credit. Therefore, when people with poor credit face dire need of money, they find no one to help. Advocates of personal loans think that they help these people by offering no-credit-check instant cash against interests higher than traditional loans. However, the opponents believe that such loans serve people who are on the lower rung of the economic ladder. According to them, these loans often lead to bankruptcy.
Size of short term loans
Such loans usually range between $300 and $1000. However, it sometimes goes up to $1500. The loans typically need to be paid back in full on the due date. However, in some instances, the loans can be rolled over for a period of 2 weeks or more if both parties, the lender and the borrower, are agreed upon it. These cash advances often come up with high interest rates though it differs by lenders. So it is always recommended that the borrowers conduct a research to find a lender that charges minimum interests.
Points to be considered
Due to the limitation on annual percentage rate or APR imposed by the state legislation, many lending companies are opting for partnership with the banks to avoid local regulations. A same day lender associated with a bank in another US state is not restricted by the local laws and thus they can charge an interest rate of their choice. Nevertheless, Consumer Unions urge the Comptroller of the Currency and Federal Reserve to do something in order to stop this practice and make it illegitimate for the banks to offer a same day loan.
Discussed above is the basic info regarding same day loans. If you're in awful requirement of quick cash to meet a financial emergency, you can opt for such short term loans.
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