Living with paycheck often accompanies with numerous challenges especially when you need instant cash in the situations that cannot wait until you get your next payment. Running out of money is very common these days but when a financial emergency arises, there will be severe need of money, and sometimes, it becomes really difficult to get some. This is the point where payday loans play their role in order to rescue the situation. This type of loans is quick and aims to offer you short-term financial support until the next payment. Various surveys reveal that there is an increasing number of customers who take a payday loan to meet their financial needs. This establishes an undeniable importance of payday loans which is rapidly growing in today’s society on a frequent basis.
What Are Payday Loans
Payday loans are short-term loans, usually for 2 to 4 weeks. They are also known as Payroll advance loans, check loans, paycheck loans, and cash advance. Normally a loan is repaid when you get your next salary. If the loan cannot be repaid on time, it will cause you to rollover the amount by paying additional fees to the lender along with a percentage of interest.
There are varied time spans for the repayment associated with payday loans, depending on the lender you are using. Nonetheless, the mainstream time period to repay for this type of loan is as little as two weeks. You can pay the amount in installments which involve interest. The amount of a payday loan is usually determined by your monthly salary as well as the financial situation you are in.
Are You Eligible for Payday loans
Normally, anyone who has a subtle source of monthly income can avail a payday loan. Other requirements include having an active bank account and identification cards that are put forward to ensure the lender that you are trust worthy to repay the loan since you are employed and earning.
There are many companies that offer payday loans on easy conditions. You can look for online cashing facilities to obtain a payday loan or visit their office in person to get your loan. When it comes to repayments, you will need to provide the lender with paycheck on your payday. In case of a failure to repay the loan on time, you will be required to rollover the amount and pay it later with set penalties.
Pros & Cons of Payday Loans
Payday loans are very popular these days. Like other loan types, they also involve several benefits and risks which you should be familiar with before taking one up.
Accessible & Convenient
Payday loans are handy in dealing with financial emergencies. They are considered to be quite discreet so you do not need to worry about anyone knowing about your financial problem when payday loans can be easily and discreetly accessed.
Flexible Collateral Requirement
These loans can be availed without any kind of collateral requirements. The process is quite simple, needing you to fill in an application form for evaluation purpose, and you are qualified for a desired short-term loan almost instantly.
No Worries About Credit History
Unlike traditional loan types and credit cards, payday loans do not require any credit checks or rely on your credit history for the approval. As long you provide them a subtle source of income in order to assure repayments, you are all set to go.
Quick and Easy Procedure
The procedure to obtain one of the payday loans options is easy and quick, allowing you to access the funds when you need them most. At times, it only takes a couple of hours for your loan application to be approved and for the loan money to be transferred to your bank account.
Payday loans do not cover long-term financial situations. Instead, they are perfect for emergency situations where you need instant cash. Continuously relying on payday loans may result in further financial problem for some individuals.
Higher Interest Rate
Payday loans do not entail a good credit history or any kind of collateral and so come with a higher interest rate. This needs you to be very cautious when selecting a payday lender in order to avoid the situation where repaying can become too challenging for you.
Credit Score Issues
Like other loan types, payday loans can influence your credit score particularly when you repay late and experience penalties. While most payday lenders do not ask for a good credit history, failing to repay can still impact your overall credit score, marking it negative. Having to experience this situation can also affect your access to take loans from other financial intuitions such as banks in the long run.
If you are unsure that a payday loan can help you meet your financial needs, below are a few tips to check.
- Evaluate your financial problem and available financial resources to see if you can deal with the situation in available funds.
- Determine how much amount is needed to fix the problem.
- Ask yourself if you are ready to pay higher interest rate with repayments
- Choose the repay method according to your financial circumstances.
- Try hard to repay on due date. Otherwise you can always apply for an extension of 48 hours depending on your payment history. Remember, it will involve penalties too.
Payday loans can be life saver in hard-to-manage financial emergencies on short-term basis. Since they come with many pros and cons at the same time, it is crucial to evaluate the financial situation you are in in order to determine whether this short-term loan is exactly what you need to overcome it. Sometimes, you may come across several serious expenses changes in order to meet your funding needs. It is recommended to stick to the payday loans only if there is an absolute need of it and when it is the only suitable option to chase at that moment. Moreover, do compare numerous payday lenders so you can get yourself a better deal and repayment methods according to your financial status.