What is a payday loan?

A payday loan is a type of short-term borrowing where a person can borrow cash in exchange for a post-dated check. The borrower agrees to pay back the amount plus interest and fees once they receive their next paycheck.

These loans are typically used to cover emergency expenses or unexpected bills. These loans are not considered a form of credit. They are classified as an unsecured line of credit, meaning that the borrower is not required to have good or bad credit.

How does a payday loan work?

A payday loan, also known as a cash advance, is a short-term loan that is typically repaid within two weeks. These loans are available to people who have a source of income and a bank account. The amount of the loan is typically less than $1,000, and the interest rate is high.

To obtain a payday loan, you must provide proof of income and a valid bank account. In the past, these loans were reportedly used by people who couldn’t get a loan from a traditional bank. Nowadays, borrowers are increasingly turning to payday loans to pay for things like medical expenses, utility bills, and car repairs.

What are variable rate loans?

Variable-rate loans are loans where the interest rate can change. This means that the amount of money you pay back each month can change, depending on what the interest rate is at the time. Variable-rate loans are often used for things like mortgages or car loans, where you might want to be able to afford more or less money each month, depending on your situation.

If you stop paying your variable rate loan, the lender might try to collect the money you owe. Usually, this means calling up or sending letters to find out how much you owe and what action they want to take.

Source - nashvillefinance