Payday loan: advantages and disadvantagesLeave a Comment
There are certain times when you may need immediate financial assistance and can’t afford to wait for days or weeks for a bank loan to be approved. One of the best and fastest ways to get instant cash is applying for a payday loan with guaranteed approval. However, before you dive in to get payday loan help and manage your debts with payday loan consolidation, let’s take a look at what a payday loan is, how to get one and its advantages and disadvantages.
What is a payday loan?
Payday loans are a relatively new invention that came into existence in the early 1990s. Originally, payday lenders began exclusively as small shops where one could visit and personally apply for cash. Today, while those physical shops still exist, many payday loan transactions are done online from the comfort of one’s very own home.
Taking out a payday loan is one of the fastest and best ways to get instant cash. No matter what your emergency is, applying for a payday loan will get you the needed amount of money in no time. Since the service is really fast and easy to get approval for (you usually get no credit check payday loans), payday loans have very high interest rates which are much higher than conventional bank loans. That’s because payday loan lenders take a risk in not seeking collateral from borrowers and only ask for basic personal information and lending money to applicants with bad credit. With payday loans, the borrower usually borrows an amount of money that he is confident of repaying by his next payday. Being late in repayment will result in hefty penalties.
How to get a payday loan?
Applying for a payday loan is really easy and simple. There’s no need for repetitive meetings with representatives from various lending companies before getting the loan. The number of documents you need to submit together with your payday loan application is significantly smaller compared to what you’re required to submit when applying for a bank loan.
When you fill out an application for a payday loan, you must provide necessery documents as proof of employment. or the loan approval process will be delayed.
Advantages and disadvantages of payday loans
Payday loans advantages
There are many advantages of payday loans.
Very easy to obtain
Just about anyone with a stable job can apply for a payday loan.
All you have to do is fill out an application and in a few minutes, your payday loan will be approved and you will have the cash you need. The loan amount can also be transferred to your bank account.
Payday loan companies are located throughout most cities and are really easy to find. Nowdays, there are also many online payday loan services. This means when you are ready to take out a loan, you can go to one near you or conveniently apply online.
Always a last resort option
When there seems to be no way to get out of a difficult financial situation, payday loans are always there as a last resort option. Since their terms of approval are relatively lenient, payday lenders will provide instant cash even when no other options are available.
Payday loans disadvantages
There are a few downsides that are worth considering before taking out a payday loan.
The interest rates of a payday loan are known to be some of the highest. For many borrowers though, the convenience and speed of being able to obtain money with a fast payday loan when it’s needed is enough to make up for the high interest rate that comes with one.
There are some scam lending companies, so it is important to know you are dealing with a legitimate lending company before taking out the loan.
Borrowing can become cyclical
It’s important that you do careful planning on your finances to so you don’t lag behind on your repayments. It’s easy for you to fall into a debt cycle that only gets worse over time.