Payday loans are a quite popular type of loan. These are basically the short term loan which is guaranteed for a specific duration of about two weeks. There exist various different names of payday loans that include emergency loans, paycheck advance, deferred deposit transaction, bad credit loan, cash advance, short-term loan, and payday advance loan.
It is also known as a fast loan or fast cash which is basically due to its rapid availability of funds. If you are financially weak or have no credit, then you can get the benefit of a payday check. With this option, you can access the required amount of cash for the emergency. You can even get payday loans no credit check instantly for your needs. The immediate availability of funds is the ideal approach that makes this loan to be a popular one.
Advantages of Payday Loans:
Payday loan brings ease to your life and offers you a myriad of facilities as well. There is a huge deal of positive aspects that would incline you to get the payday loan. Let us have a glance at the most popular positive aspects of payday loan so that you can make a decision about it.
Easy and Quick Access to Money
One of the key benefits associated with the Payday loans is that these are massively easy to access. Unlike other types of loans, you do not need to wait for long in order to access the loan. You would be astonished to know that in many of the cases, you would get the cash in your hands within a single day. Yes, you read right!
Moneylenders do not let you wait more but take the immediate lending decision. You can submit an online application for this loan. The availability is offered 24/7 to facilitate your loan application rejection or acceptance. Traditional loans demand you to fill the comprehensive documents which surely take lots of time for applying while a payday loan requires quite a little time of yours. It hardly takes a few minutes for you to fill the loan application form.
No-Risk of Seizing the Property
A payday loan offers fast cash, but little cash which you need to pay is quite less duration. It is an unsecured loan where you do not associate your property such as a home with your loan. This amazing benefit would secure you the most and perfectly deals with the troubles that you may suffer from in the future with traditional loans.
In the case of any default, where you are unable to pay back the money to the lenders due to poor financial condition or any other reason, your property remains safe. Your property would remain secured from being seized by the lender. The seizing of property is the quit notorious and undesirable approach of the traditional loans which are avoided in payback loans.
Minimal Approval Requirements
When it comes to the application for the traditional lenders, you have to fulfill certain requirements such as credit check, proof of income, your photo ID, and Social Security number. Moreover, for the traditional loans, you must provide proof about your ability to repay the loan. However, the payday loan demands minimal documentation from you just to facilitate you. These include an active bank account, proof regarding the source of income, Government-issued ID number, and 18 years of age.
Get your cash quite quickly by fulfilling these minor requirements. This convenient way of getting the cash aims to help you out in several regards.
No Credit Check
Many people resist applying for a loan because of the risk of getting rejected due to poor credit history. Payday loan proves to be a massive blessing for those who are not having good credit. So, you remain safe from credit inquiry. For getting approval for a payday loan, you do not need to depict your credit history. What can be more feasible than this!
For availing the Payday loan, you do not need to show your credit details to lenders! Get benefit of this ideal facility of payday loan.
Higher Loan Amounts
Often times, people who use higher loan amounts don’t have access to a high limit credit card, home equity line or conventional loan. For a short term loan, you can receive a higher request for funds. If you are in a tough situation, this could be the only option to get the funds required. However, you should be very careful to pay this amount back on time or it could hurt your situation more than it helps.
Disadvantages of Payday Loans
Paydays loans are not only meant to offer benefits only. However, there are associated with different negative aspects or cons of the payday loan. It is necessary to know about these aspects in order to avoid such in a timely manner. Let us have a glance at these cons of a payday loan:
The user easily tangled in the debt cycle, and it is hard to take oneself out of it. Apparently, the loan seems to be beneficial, but the heavy interest and debt are ample to give to quite a tough time. The additional fee is being charged by the lender when you consider to rollover the loan. Hence, the borrowing amount exceeds immensely.
Risk of Being Sued
Legal battles are quite notorious as these drain your money, time, energy, and repute as well. Failure to repay the loan amount to the lender makes you a defaulted person. The lender has the authority to sue you when you are unable to repay the amount. It may lead to heavy fines or even imprisonment.
A Beautiful Trap
It would not be wrong to regard the payday loans as a trap. Apparently, these seem to help you in your crucial times, but deep inside they cut your roots. How? It is because many unfair terms are associated with these loans and they have strong potential to trap you in the storm of debt. These keep on escalating quite rapidly.
High Interest Costs
High-interest rates associated with the Payday loans make it cost an arm and a leg. Such an interest rate is usually accepted by the people quite quickly at the time of submitting the application. Approximately 4% to 36% of interest is charged along with personal loans.
But, with a payday loan or cash loan, the average interest rate rises to the peak, which is approximately 400%. This optimum interest rate is ample to burden you. Hence, it would not be wrong to say that payday loans let you take a step forward and two steps backward.
Targets Low Income People
One of the negative aspects of Payday loans is that the lender has access to your bank account, which is harmful to you. Similarly, you are restricted from building up the credit. It often targets people of low income.
Could Damage Your Credit
Moreover, if you do not pay back the loan as agreed, the lender may turn to a collection agency. They will try to collect the owed debt by several different methods. If a collection agency gets involved, they could take you to court, which will show up on your credit report. This could seriously damage your credit in the long term.
People with less income find a huge attraction in these types of loans due to its potential benefits. However, they ignore the consequences of it. So, it is better to have complete knowledge about the positive and negative aspects in order to avoid the traps.