Working Process of Online Payday

A payday loan, also known as cash advance loan, payroll loan, small dollar loan, salary loan is an unsecured loan that is it does not require any guarantor and is collateralized by an item of property do that the payday loan can be secured which is known as lien. The term lien generally encompasses all types of mortgage forms, and in case the borrower is not able to repay the loan, the lien that is used as collateral then becomes the property of the lien holder. A payday loan is used for short period of time to meet the unexpected expenses.

Some countries put the limit on the interest rate so that excessive and unreasonable usury can be stopped while some countries have totally banned payday loans and some of them put only few restrictions on the money lenders. Mostly the students without a degree; divorcees; immigrants; single parents take payday loans to cover ordinary and daily expenses. Usually a borrower is indebted for four to five months of a financial year.

Those who support payday loans support their stance by arguing that the interest rate is according to the money borrowed and are not meant to yield extra benefits.

Universal Criticism

Payday loans are often criticized because those who borrow money are often the workers having low wages or even work where the work is only for a short period of time that is seasonal jobs. These loans often lead the borrowers to go into an economic crisis and often end up being in a debt trap, that is to repay a loan, the borrower tend to take another loan, and thus the cycle never ends. Also the major proportion of people who take payday loans are either unbanked or under banked and are least able to secure a financial security and get interest or credit.

But as the technology has advanced, people can now also apply for an online payday loan by applying to a bank and filling the personal details about income and expenses and to facilitate the process, inbuilt online calculators are used to calculate the loans and the EMI (equated monthly installment) that needs to be paid within a given time period. To learn more, visit