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Life is full of surprises, especially when it comes to spending money. Unanticipated expenditure can be of any nature. It can be a medical emergency, urgent repair work at home, or even a discount sale in a remarkably good mall or shop. Lending institutions have come up with the concept of payday loans, that would help you cover up cash deficiency in such situations. Due to the payday loan one does not have to wait for the pay day (day when one receives the periodic salary) before spending money.

Payday Loans

A payday loan is a kind of credit creation facility, that has been initiated by lending institutions to make available, fast-credit to people. A payday loan is usually applied for, when a person is in need of an amount of money, that is relatively small. As compared to a normal loan like real estate loans, amount of payday loan is small. Time period of payday loan lasts up to next payday.

Payday Loans for Savings Account

A payday loan that is sanctioned on the basis of a savings account by the lender or bank, is known as a payday loan for savings account. This loan is usually sanctioned by the bank, where one holds his savings account. Method to avail a payday loan for savings account, is relatively simple. Most banks have made this facility available in the form of on-line applications for the loan. If not, then on can collect the form from the bank itself. This form demands age, contact and identity proof of the applicant. The employment status and periodic income of applicant are verified by the bank. The periodic deposits made into savings account are also considered. Some lenders also prefer to verify the applicant's employment status with the employer. Verification process is simple and fast and is usually completed within 24 hours. Usage of a better database and modern computerized technology, has made it even more swift.

Once the process of verification is complete, amount of loan that has been applied for, is deposited into savings account and details of transaction are communicated to the applicant. Sometimes, if amount exceeds that value of periodic pay check, credit history of that applicant is evaluated. In case of a bad credit history, whole amount is not sanctioned. If one has availed for a payday loan from the same bank where he holds a savings account, then the amount of loan is directly deducted from the savings account after the pay check is received. Interest that is charged on payday loans is relatively low.

If the applicant is availing service from some other lender (other than the bank that houses the savings account) then, process of verification takes a little longer. The lender usually gets in touch with the bank, where the applicant has a savings account and also the credit card companies. In such a case interest rates might be a little higher. In normal situations the lender does not demand security or a collateral. However sometimes, in cases of very bad credit history, collateral like a car or a personal computer is demanded.

A payday loan is certainly an excellent facility that can be availed. However a good credit history has benefits of its own.