Payday loan is a small, short-term loan that is intended to cover a borrowers expenses until his or her next payday. The loans are also sometimes referred to as cash advances. There are a lot of Payday loan companies around, both offline and online. Find below some of the issues you need to consider before deciding to take out a payday loan.
The Pros
1. Payday loans are the fastest and most easily approved loans today. A payday loan is a way to get some money quickly just when you need it. They offer instant financial relief. For example let's say you are faced with some financial responsibility and you have no money to use. It could be an unexpected car repair bill that you need money to settle quickly. A payday loan could be the answer because it is money that you can apply for and can be delivered into your account within 24 hours.
2. There are no credit checks, which means that even if you have bad credit, no credit or are bankrupt , you are likely to be able to obtain a payday loan. The loan requirements are that, you show proof of a steady job and that you possess a bank account.
3. The application process is simple and straight forward unlike other financial institutions that can take days just to look at your application. If your payday loan application is successful, the money can be transferred into your account instantly.
The Cons
1. Even though the cost of borrowing differs from one lender to another, the cost of taking out a payday loan can be very expensive. Generally, Interest rates charged on fast cash is extremely high. This is because, the lenders take a high risk by not undertaking credit checks. Thus, they compensate these risks with high interest rate.
2. The timeline for paying back the loan is short. It could range from 7 to 28 days..
3. If you are unable to pay back at your next pay day, you can renew or extend the loan. This process is called "roll over". The risk is that, the extension to this timeline can make you end up paying a much larger amount than what you initially owed to your lender. There have been instances where people have been caught in a cycle of debt as a result of extending the repayment time several times.
Payday Loan Hints and Tips
If you do decide to take a payday loan, here are some issues to keep in mind.
1. If you need a large amount of money then a payday loan may not be the answer. This is because, you may not be able to pay back such an amount in a short time.
2. There are many payday loan companies, both online and offline. Shop around and choose the lender with the best competitive interest rate.
3. Don't make it a habit of borrowing every month, ensure that it is just a one off for temporary emergencies.
Instant payday loans are quick, easy to get, and, in most cases, funds will be available instantly. You should keep in mind that the loan will need to be repaid on time to avoid getting caught into debt.
