Documents required to get pay day loans in Alabama
Need for a payday loan
A payday loan is generally a high-cost unsecured loan which can be availed when one is met with a short-term financial crisis. This type of loan can be secured both online and offline. It shoùld be repaid on the day next to the payday. These type of loans are particularly beneficial when an employed professional who is earning a monthly salary has an urgent credit need but has already exhausted his or her salary.
This loan can be made use of to pay off various regular bills and other household expenses, or take care of any other short-term requirements at the backdrop of an exhausted salary at the end of the month by the borrower. These loans inspite of carrying a high rate of interest, are preferred by many individuals since they do not require any collateral or guarantor. Additionally, these loans can also be availed even when a person has a bad credit history.
Case of bad credit
Most of the lenders offering payday loans do not check the credit history of the applicant. Being an unsecured loan, the customer does not have to provide any guarantor or collateral as security in order to secure credit under this scheme.
Under normal circumstances, a lender offering payday loans doesn’t verify if the borrower can repay the loan while meeting his or her other financial obligations. As these loans do not require any guarantor or collateral, the risk associated with them is extremely high. Therefore, the interest rate charged for these loans is also usually very high.
Payday loans are a kind of short-term loan. Because payday lenders don’t typically require a credit check, people with bad credit who can’t access more traditional lines of financing may take out a payday loan when faced with a financial emergency.
Payday loans are considered legal in the state of Alabama. Alabama imposes a $500 amount limit on payday loans offered in the state. Payday loans can be taken for a period of 10-31 days with the maximum finance charge of 17.50% for every $100 and 456% APR.
One rollover is allowed and a cooling-off period of 1 business day before a person can apply for a new loan. There is a $30 NSF (non-sufficient funds) fee while criminal actions are generally prohibited.
Payday Loan Requirements
- Meet minimum age requirements. (18 in most states)
- Valid ID.
- Proof of steady income.
- Open and active checking account.
- Working phone number.
In most states, you must be 18 or older to get a loan. However, in Alabama you must be at least 19 to take out a loan.
Rules for lenders
Regulations apply to both online and storefront loan providers. In order to operate in the state, lenders have to comply with the following regulations:
- All lenders must be licensed.
- All lenders must disclose all the loan information (terms, interest, fees, repayment period) before the loan documents are signed.
Though criminal action against borrowers in Alabama are generally prohibited, in rare cases they can be initiated when repayment check is returned due to the closed account.