The payday loan is identified as a loan with minimum requirements for borrowers. A simple application process gives to payday loans significant advantages over other types of loans.
Another advantage of applying for a payday loan as opposed to a car title loan or some other types of loans is that you do not need to offer up collateral.
This means that the payday loan is classified as an "unsecured" loan, as opposed to a "secured" one.
If you cannot pay back your loan on time, the lender will not be able to seize your property (your car, your house, etc.). As a guarantee of the loan repayment, the lender will ask you for admission to take the money directly from your bank account. In orther words, a ACH Authorization is needed.
You will not qualify for a loan unless you have an active bank account. You will not be given an allowance unless you provide ACH authorization.
With ACH authorization, the lender can withdraw the amount of the loan and interest owed on the due date from your account.
If the lender is unable to withdraw this full amount, they may charge you one or more fees.
So even though you do not need to secure a payday loan with collateral, it is of vital importance to make sure that you can afford to pay back the loan on time and in full.
Reviewed by: Casey Bond
Date Reviewed: July 22, 2019