A fast payday loans, also known as a cash advance, is a short-term loan with a payment due on the next payday. The average loan size is small, but the interest rates are high. You might use a payday loan to pay for unexpected costs or fill the time until your next payday.

If you are not informed about this kind of financing, this article presents both the good and bad sides of payday lending.

The Pros of Fast Payday Loans

It can be hard to obtain a regular loan, and times during emergencies, borrowing cash from a payday lender could be the most viable option.

Convenient

It is technically simple to apply for a payday loan, and approval should be expected in a few minutes as long as you meet the lender’s requirements.

No credit check

Payday lending does not involve a credit check. The applicant’s credit history or credit rating is not a factor. So, anyone can get approved without hassle.

Easy Approval

To get approved, the borrower must be of legal age, a resident of the United States must have an active checking or savings account, and must be able to present proof of income.

Fast Funds

One of the best aspects of payday loans is their speed. The money is usually in your account within 24 hours of applying. It can be a lifesaver if you’re short on cash and need it right now.

The simple online application process

An interested borrower can fill out and apply online. Upon approval, the lender will send the funds through electronic transfer so the borrower can withdraw the cash on the same day.

The Cons of Payday Loans

Despite the convenience of a fast payday loan, consumers are advised not to seek this type of assistance in a hurry.

Before acquiring a cash advance from a payday lending company, consider the possible consequences.

The high-interest rates associated with payday loans

The primary disadvantage with cash advance payday loans is the steep interest rate. Payday loan lenders can charge 200% up to 300% interest rate. Some lenders may even charge as much as 500% interest. The rate will depend on the lender and the State laws on lending.

The short repayment period for payday loans

Many people are unaware that payday loans have a short repayment period. In most cases, you must repay the loan in full within two weeks.

Laws Regarding Payday Loans

Take note that the lending laws vary from State to State. That is why you should check the lending laws applicable to the State where a potential payday lending company is registered.

In some states, payday lending is illegal, but residents can still acquire cash advances from online lenders. These lenders are registered or obtained their license to operate from a state where payday lending is allowed. So they can offer their services online.

Be sure that your chosen payday lender abides by the lending laws of your State.

Some states prohibit payday lenders from giving out more than one loan to the same customer.

Nevertheless, a borrower may still acquire more than one loan from different payday lenders. However, this move is dangerous because of the interest rate and penalty charges.

There is a high risk of being stuck in bad debt when a payday loan is not paid in full and on time because of the steep interest rate.

If you fail to pay back the loan by your next paycheck, you will incur an additional interest charge that ranges from 100% to 300% of the loan amount.

Consider other possible solutions, such as borrowing from a friend or relative to get a lower rate. Payday loans should be your last resort type of financing. But don’t make a habit of taking them out. But don’t make a habit of taking them out. Instead, start creating a budget and savings plan so that you never have to rely on this sort of financing again.