What is a payday loan?

There are multiple forms of credit that one can purchase from banks. These forms of credit differ based on their conditions, the loan duration, and a variety of other factors., such as personal loans, education loans, home loans, etc. One such form of credit option is known as a payday loan. In this blog, we will explore what is it that makes a payday loan a preferred choice for consumers, what are the interest rates and much more.

What does a payday loan mean?

Payday loans are all short-term loans that also come with a high rate of interest. It is termed so because the payday loan principal amount is based on your upcoming pay check. Now, since you need the credit amount immediately, banks charge a high rate of interest on it.

Read more: What is a personal loan?

What are the interest rates of a payday loan?

You should be wary about applying for a payday loan because the rate of interest is usually very high. Sometimes, the interest rate can even shoot up as high as 30%, and repaying such a heavy interest rate could lead to a significant financial burden for you. 

What are the eligibility criteria for applying for a payday loan?

Here are some of the eligibility criteria for applying for a payday loan:

• The primary borrower must be an Indian citizen
• Borrower should also be above 18 years of age to be eligible for the loan
• Must have a regular source of income and full-time employment
• The applicant must have an active current account in the bank
• The candidate should also ensure that they have the right documents in place for a payday loan
• An active phone number is also needed

Read more: What is the minimum salary required to get a personal loan?

How can I apply for a payday loan?

Here are the steps on how you can also apply for a payday loan from your preferred bank:

• Go to the nearest bank branch and collect a form or fill up the application from the net banking portal of your bank
• Enter all the details as they are required 
• Provide all the documents as needed
• Wait till the lender approves your payday loan
• After all the documents are verified, you will get your payday loan 

Read more: How to improve your credit score – complete guide

What are the documents needed for a payday loan?

Here is a list of the documents that you will need to get a payday loan:

• Proof of Identity (PAN card, Aadhaar card, driver’s license, voter ID, passport)
• Proof of Address (Aadhaar card, driver’s license, voter ID, passport, ration card, utility bills)
• Proof of your age
• Income proof
• Letter from your employer or organisation
• Passport-sized photographs

Read more: What is an unsecured personal loan?

What are the different features of a payday loan?

Here are some of the features of the payday loan which help it to stand out from the other forms of short-term credit:

• The amount that you can borrow is usually small and the repayment tenure is also short
• You are required to pay the borrowed amount as soon as you have received the salary
• The due date of the loan amount usually varies between 2 weeks to 4 weeks
• The credit from a payday loan can be offered in terms of cash or a cheque
• The loan application process is usually fast, and credit is disbursed quickly too
• Most of the banks that offer payday loans do not check your credit history
• While applying for a loan of this kind, remember that the lenders are never too stringent about the requirements
• Payday loans are considered a form of unsecured loans, which is why the borrower won’t have to offer any collateral while applying
• These are very high-risk loans, which is why the rate of interest is also high

Read more: What is the importance of credit score?

Apply for a personal loan from Airtel Flexi Credit

If you are looking for a way to get credit quickly, without paying a huge rate of interest or high EMIs, then choose Airtel Flexi Credit. With Airtel Flexi Credit, you will get personal loans with all the benefits added, and without any of the headaches.

A completely digital process, minimal paperwork needed and flexible EMI options – get all of these. In addition, the loan application process is extremely simple and effortless as well. So, stay away from the high-interest personal loan offers in today’s market and choose Airtel Flexi Credit.