Payday Loans - The Pros and Cons of Payday Loans
With payday loans, people can get out of financial emergencies fairly quickly and without much hassle.
These loans are generally a simple solution to the problem and their easy accessibility makes them
particularly popular. However, it is a good idea to compare both the benefits and drawbacks of these
financial products in order to make a well-informed decision.
Quick cash - Usually, borrowers who take out payday loans receive the money which they need into
their checking account within 24 hours after their application. In most cases, there is same-day approval
and the money is deposited into your account instantly or on the next day. Simply put, you get your
money in a day while banks typically make you wait for days and sometimes weeks.
Easy approval - Applicants with bad credit and/or low credit score have much higher chances of approval
when applying for payday loans compared to short-term loans offered by banks. This is because payday
lenders rely on the fact that you have a fixed monthly income in the form of a salary. As long as you get
paid, they will get their money back. Hence, they typically approve subprime borrowers quite easily.
Higher interest rates - Payday loans typically have fairly high interest rates compared to other financial
products such as short-term personal loans. If you compare APRs (annual percentage rates of interest),
you will clearly see the difference. The reality is that the high APR is actually not that scary given the fact
that you will borrow the money for just a single month. Often, lenders present the actual amount of
cash which you will have to pay back in addition to the principal and it is not particularly large. You just
need to ensure that you will be able to repay the total sum.
Risk of getting into debt - The high interest rate is one of the major risk factors. If you find it difficult to
repay the loan on your next payday, you will have the opportunity to extend it, but the amount which
you will have to pay back will grow considerably and this can make the situation more difficult for you.
Another issue is that many people use payday loans in cases of financial emergencies with longer term
implications which are difficult to resolve just with the borrowed money.
Now you can decide whether payday loans are a good option for you. Take out such a loan if you are
certain that you can repay it.
Use an extensive guide to payday loans to find the ideal product for you. Save time and effort in case of
a cash emergency. Find the best deal that will save you lots of money easily and quickly.
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