What is a no fax payday loan?

A no fax payday loan is a small loan (usually a few hundred dollars) that does not require a credit check. Payday loans have short terms of usually one or two weeks and must be paid back when the borrower receives his or her next paycheck. Payday loans are intended to provide cash to cover financial emergencies until the borrower’s next payday. These loans go by other names, including “cash advance”, “check cashing”, “payroll advance” and “deferred deposit.” Many payday lenders are not licensed, bonded or regulated by state governments

Payday loans are expensive, at least my one measure. For example, a typical $100 payday loan will cost the borrower $20, or 20% of the loan amount. Annualized, however, the 20% fee turns into an APR of over 500%. What is debated is whether it is appropriate to use an annualized percentage to evaluate the costliness of a short term loan. Many believe that such a comparison is unfair and misleading.

How do no fax payday loans work

There are several requirements before an individual can obtain a payday loan. First, the borrower must be 18 years old or older. Second, they must be employed and making a minimum monthly wage, typically $1,500 to $2,000 per month. Third, they must have a checking account. No credit checks are typically performed, so bad credit will not disqualify somebody from a payday loan.

When the borrower obtains the loan, he or she writes a post-dated personal check for the amount of the loan plus applicable fees. In the case of a $100 loan costing $20, the borrower would write a post-dated check for $120 made payable to the lender. Many payday loans are obtained via the Internet, which can accommodate these transactions through the use of bank wire transfers. The lender then advances the loan amount, and when the loan period has expired, the lender cashes the post-dated check and the loan is repaid. If the borrower is unable to repay the loan at the end of the loan term, they often obtain yet another payday loan to cover the cost of the first one. Called repeat borrowers, they are usually the type of consumer state legislation is designed to protect.

How do states regulate the payday loan industry?

State regulations cover many aspects of the cash advance industry, including disclosure, interest rates caps and other restrictions. The two primary restrictions relevant here are capping the interest rate and limiting the number of loans a single borrower can take out in a year. The first restriction, interest rate caps, is well intended but misguided. The second restriction, limiting the number of loans, has more promise in giving consumers real, meaningful protection.

The problem with capping the interest rate is two-fold. First, it wrongly places too much weight on the annual percentage rate (APR) of a loan. Because payday loans are very short in duration, practically any fee over a few dollars will, as a matter of simple math, result in a triple digit APR. That’s true even if the fee is just $15 dollars on a $100 payday loan. While at first glance a 400% APR appears shockingly high, such a measurement for a 7 to 30 day loan is nonsensical. And capping the interest rate without any analysis of the costs to operate a cash advance store is simply shooting at the problem blind. The result typically is that such regulations drive the payday loan industry out of the state, increase unemployment, and push borrowers to pursue black markets to obtain needed cash.

Limiting the number of payday loans a borrower can obtain in a given year is a regulation with more promise. A similar but different approach is to limit the number of times a loan can be rolled over into another cash advance. Either way, the goal is to help consumers avoid becoming chronic payday loan borrowers. While such regulations are not fool-proof, if properly crafted, they can go a long way to helping consumers while not driving the no fax payday loan industry out of business.

Annual Percentage Rate- APR

The effective interest rate charged over a period of one year for a loan. The APR factors in not only the interest paid, but also any fees or other charges. For this reason, the APR is typically higher than the quoted interest rate on a loan. For short term loans like payday loans, the APR can be very high.

Bad Credit

Bad Credit is generic term used to describe someone who is considered a “high risk” to repay loans to lenders and other finance companies. Bad credit is usually the result of poor repayment history of loans or mortgages, foreclosures, bankruptcies or a history of late payments. Bad credit is sometimes determined based on a borrower’s credit score, also known as a FICO score. Borrowers with bad credit generally poor higher interest on loans than those with a solid credit history.

Cash Advance

A cash advance is another term for a payday loan. Similar to a payday loan, a cash advance is a relatively small loan made for a short period of time. Most cash advances are for less than $500 and must be repaid in less than 30 days. As with payday loans, most cash advances are made with a credit check and are intended to help the borrower make it until payday.

Consumer Advocates

Consumer advocacy groups are those seeking to educate consumers about a variety of consumer products, including payday loans. Some consumer advocacy groups also lobby local, state and federal governments in an effort to pass laws that they believe are in the best interest of consumers. Consumer advocacy groups take several approaches to the payday industry. Some seek regulations banning payday loans completely. Others seek to have laws passed to regulate the amount of interest and fees charged by no fax and other payday loans.

Credit Check

An credit inquiry performed to obtain information about a borrower or prospective borrower’s credit history. Credit checks are usually process through one of the three large credit bureaus, Experian, TransUnion or Equifax. Credit checks will show a borrower’s credit score, payment history including late payments and write-offs, bankruptcies, foreclosures, and available credit. No fax payday loans typically do not involve a credit check.

Credit Score

Also known as a FICO score, a credit score is a number assigned by credit bureaus to borrowers that reflect the overall credit worthiness of the borrower. Credit scores range from a low of 300 to a high of 850, though some say it goes up to as high as 900. The average credit score in the United States is approximately 693.

Faxless PayDay Loan

A term adopted by the PayDay loan industry to indicate that borrowers don’t have to submit their loan application for via a fax machine. This allows borrowers to apply for a payday loan online, without the need to find a fax machine to submit additional information.

Interest

The amount of money charged by a lender to a borrower for the use of their money. It’s typically calculated as an annual percentage rate and can be fixed or variable. Unlike the APR, the interest does not include any additional fees or penalties charged by the lender. With no fax payday loans, the annual interest rate can add up to hundreds or even more than a thousand percent.

No Fax Payday Loan

A no fax payday loan is identical to a faxless payday loan.

PayDay Loan

Similar to a cash advance, a payday loan is a short-term loan for a relatively small sum of money, provided by a non-traditional lender. Th average payday loan is valued at $200-$250 and is extended for a period of 1 to 30 days.

A no fax payday loan is a payday loan that doesn’t require you to fax pay stubs and other information to the lender. Many no fax payday loans, in fact, can be obtained online without even going to a cash advance or payday loan store.

Benefits of No Fax Payday Loans

There are two primary benefits of a no fax payday loan. First, borrowers can obtain needed cash faster with a faxless payday loan. These loans can often be processed in less than 24 hours and the funds wired to your checking account. Second, these loans are more convenient to obtain. For both of these reasons, the growth in the number and dollar amount of no fax payday loans has been explosive.

Risks of No Fax Payday Loans

Unfortunately, these benefits can have negative consequences for some. The ease and convenience of no fax payday loans encourages some borrowers to repeatedly use payday loans for short term emergency financing. While the occasional use of a payday loan for emergencies can help a family get through a difficult financial crisis, repeated use of payday loans can eventually cost the borrower significantly more than the amount borrowed. So as with any credit, one should use a no fax payday loan with care.

An Emergency Fund

An emergency fund is savings that you accumulate equal to 3 to 6 months worth of expenses. For many, the though of saving up to 6 months of expenses seems impossible. One of the keys is to start by trying to save one week’s worth of expenses. For many, this one step would eliminate much of the need for payday loans. From there, you can build up your emergency fund dollar by dollar. Eventually you’ll find that you’ve saved up one month’s worth of expenses or more.

Credit Cards

Credit cards can be a convenient alternative to no fax payday loans. Credit cards are accepted just about anywhere, and most do not charge any interest if paid in full each month.

Overdraft protection

Most banks offer overdraft protection with their checking accounts. Overdraft protection kicks in when you don’t have enough money in your checking account to cover a check or cash withdrawal. The amount of overdraft protection depends on your credit history, but it can be as much as $3,500 or more. As with payday loans, however, banks do charge interest on overdrafts.

Unsecured lines of credit

Banks offer unsecured lines of credit that you can use in an emergency. They are similar to credit cards, except that the money must be withdrawn from the bank; they don’t give you a credit card linked to the account. You can, however, transfer money from the line of credit to your checking account via the Internet.

Home equity line of credit

If you own a home, you can apply for a home equity line of credit. They act like an unsecured line of credit, except that the bank has a mortgage on your home to secure the debt. That means if you fail to pay the loan, the bank can foreclose on your home. However, this type of credit typically comes with a lower interest rate.

These are the primary alternatives to a no fax payday loan. When deciding what is best for your situation, you should consider all of your options.

In Ohio, Cash AdvantEdge charges fees for payday loans that are equivalent to an annual percentage rate of 782%, according to the Wall Street Journal. There is legislation pending in Ohio that would cap these interest rates. On Wednesday, that bill passed in the Ohio House.

What has Rent-A-Center so bent out of shape is that an Ohio food-bank association supports the legislation. According to a Wall Street Journal article, executives at Rent-A-Center made a series of telephone calls to America’s Second Harvest threatening to yank charitable contributiosn from hunger programs unless they withdrew their support for the Ohio payday loan legislation. Rent-A-Center has confirmed the phone calls, saying they didn’t want its $500,000 pledged to an organization that was supporting anti-payday loan legislation.

The legislative chairman of the Ohio Coalition for Responsible Lending was not impressed, calling Rent-A-Center’s tactic “out of bounds.” He said Rent-A-Center is just “trying to buy people off.”

Cash AdvantEdge operates no fax payday loan centers online. According to its website, a $100 payday loan costs $20 in fees.

If you would like more information on payday loans, please feel free to contact us. Thanks again for visiting and be sure to stop back again for more information on no fax payday loans.