Payday loans are the term that will be introducing you to a quick loan with liberal terms of approval. It is also such a popular alternative about a loan. However, the borrowers need to be careful and secured about the financial concept or you will be sunken down inside the tomato of debt. We did not say that this type of loan should be avoided.
A payday advance is a loan that will give you the money on the same day. The amount of money is varied around USD 700 to USD 1,000. The lender will ask you to repay it in a very short time-period. You will also need to pay with the interest, which is pretty big and if you could not pay right on the due date then you will be charged with an additional fee. The lender will ask for the pre-authorized check as the collateral.
The benefits of payday loans
Payday loans could be your saving grace if your credit score is below average or you need the quick cash for you health expense. You should use the money effectively though. Other than that, it could be a viable solution for any financial problem that occurred for short-term. The process of application is pretty easy and quick, while you can do it online.
Mostly, it does not require the credit check and things like that. So, if you are borrower who has a not-so-good credit score or residential status then you can head to this loan. The money will be granted within an hour or so. This is why people consider using this loan to make their financial situation back on track instantly.
The cons of payday loans
Typically, the traditional loan will work on the plan of an installment. It means that you will repay a certain percentage of the money you borrow each month while the interest rate grows based on the annual rate in percentage. Credit card commonly charges less than 20%. Meanwhile, the fast loans like payday loan will charge for the interest rate between 300% and 400%
The borrower could be in limited financial flexibility and sometimes the borrowed also needs to make an additional loan to repay it. It is very possible if the borrower could be dragged inside the debt cycle due to the interest rate. On the other hand, if the borrower could not pay the loan until the due date then the borrower would be charged another additional fee. It is important to read the disclosure agreement before you sign the contract because the lender could sue you to get their money back.
Even though the loan offers the simplicity of benefit, it is important for the borrower to explore other options. You can use the credit card since it only requires below 20% of the interest rate. Before you go to this type of situation, you better consider asking your family or friends for the loan. It is much easier than running to payday loans .