Quick Payday loans: Advantages and Disadvantages
Fast and easy to avail, quick payday loans are increasingly becoming popular options for emergency funds today. If you are thinking of applying for one, you might want to consider having a deeper understanding of these short term personal loans. Knowledge, after all, is your best protection when it comes to making financial decisions. This article will provide you with some of the important things that you should know when you apply for a payday loan as well as its advantages and disadvantages.
What you should know when Applying for a payday loan
Payday loans are just like those advance payment requests that you make with your employer. Not all employers, however, are comfortable in giving advances to their workers and if they do, the process usually takes time making it a not so ideal option when you need instant cash to address an unexpected expense like a forgotten bill that is due in the coming days or your car requiring an immediate fix.
In these situations, payday loans become a viable option especially if making a credit card advance is not possible. These loans, however, normally come with high APR interests ranging up to 1000%. Finding a reputable lender that offers relatively lower APR is important if you want to avoid incurring high costs in paying off your loan.
Instant Cash – From starting your application to receiving money in your bank account, the process is quick and easy, often in just a matter of hours, making it a great choice in situations where you need instant cash.
Easy to Avail – Requirements are minimal in its application process. A basic information on your personal profile such as name and address and a proof of income is often what it asks from its applicants.
Online Transactions – Applications can be processed online. When the loan gets approved, the lender sends the money directly to your bank account. Repayments are automatically collected from your account as well. No need to get off your chair when applying for this loan.
Easy to Payoff – The date of repayment is always scheduled on your pay day making it very easy to pay off. Collections from repayments are also done automatically from your bank account so unless you suddenly go bankrupt or lose your job, there is no reason why you won’t be able to pay off your dues.
Protects Your Credit Rating – Because these loans are designed to ensure that payments are made on time, you are not prone to damaging your credit history from missed and late payments. It can even become an effective way to boost your credit score as long as you continue earning salary and there is always something left in your bank account to make repayments.
Short Term – Payday loans are short terms loans so if you are looking for something that would run for several months or longer, these loans are not the ideal options.
High APR – The extra charges attached on these loans are relatively costly and higher than standard bank loans. Plus, if you fail to completely pay off the borrowed money in the agreed time, the charges may double.
You Must be Fully Employed – Full time employment is required which is unfortunate for applicants who are in dire need of money but are doing part-time jobs or are recipients of unemployment benefits and social welfare.
Requires a personal Bank Account – You need to have your own bank account to get approved by lenders since this is necessary for them to make automatic transfer of funds and collection of repayments.
Small Loans – Generally, you won’t be able to borrower higher than £2,500, depending on the lender. Not your solution to buying a new home or making a major purchase or investment.
Can be used as a scam – Can be used as a scam by crooks especially if you are applying for a loan online. You need to be cautious in choosing an online dealer as the internet is teeming with dishonest brokers who make money by selling your information.
From start to finish, availing for a payday loan is relatively fast and easy making it an appealing choice when you are in need of instant cash for emergency reasons. But it also does come with some disadvantages such as having a high APR. Try to weigh out its pros and cons and consider you current situation so you will come up with an intelligent decision on whether or not this loan is the right one for you.
Get the security of a business line of credit today
Qualify for a line up to $100,000 in minutes