Lone Star Liberty

It is clear that payday loans are usually meant to settle short-term financial deficiencies such as settling hospital bill or repairing the car as dictated by those involved in payday lending. Payday lending has no hidden charges or costs and the only qualification that should be met by the borrower is possession of a bank account besides working. This presents a brief description of how payday loans work. The borrower writes a check for the intended amount to be borrowed and is issued with somewhat less amount than the one applied for after handing the check to the payday lender. Charges for the rendered service are usually represented by the difference between the amount applied for in the check and the actual cash received. Security is guaranteed by the check. The payday lender then decides not to deposit the check for a short time usually a fortnight or until the actual payday. However, a borrower with enough money can give the lender a go ahead to deposit the check with the initial amount or they may settle the debt with cash.

More often than not, for those borrowers who find themselves in situations where they are unable to clear the loan, some few risky options are available. For instance, processing of a ‘’rollover’’ or ‘’renewal’’ so as to extend the loan for another fortnight upon payment of additional interest and extension fees in cash. The other option is for the lender to deposit the original check resulting in a vicious cycle where the borrower has double tragedy of dealing with a bouncing check and the lender. The borrower might decide to apply for another loan from a different payday lender then use the amount to settle the debt owed to the initial lender and this can be quite frustrating.

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