Thu. Jan 27th, 2022
tips for choosing payday loans loans

Quick payday loans are short term loans for consumers who need immediate cash.  If you’re not informed about this kind of financing, this post presents both good and bad side of payday lending.

The Pros of Fast Payday Loans

pros and cons of taking out payday loansIt can be difficult to obtain a regular loan and times during emergencies, borrowing cash from a payday lender could possibly be most viable option. 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.

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

An interested borrower can fill out and submit the application 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

dealing with payday loan debtDespite the convenience that fast payday loan offers, consumers are warned against acquiring this form of help in a hurry. Before acquiring cash advance from a payday lending company, consider the possible consequences.

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.

Laws Regarding Payday Loans

Take note that the lending laws vary from State to State. This 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 not legal but residents can still acquire cash laws regarding payday loansadvances from lenders who operate online. 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 borrowers use payday loans to pay another debt. In some States, payday lenders are prohibited from giving out more than one loan to the same customer. Nevertheless, a borrower may still acquire more than one loan from different payday loan lenders. However, this move is dangerous because of the interest rate and penalty charges.

There is a great risk of being stuck in bad debt when a payday loan is not paid in full and on time because of the steep rate of interest. If you fail to pay back the loan by your next paycheck, you will incur the additional interest charge which can range anywhere 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 are good as a last resort type of financing.  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.

By Shelly Evans

Shelly Evans is a freelance writer and loan consultant. She specialize in writing articles about obtaining financing despite having bad credit. She has more than 16 years in consumer credit and collections and 4 years in business financing.

2 thoughts on “The Advantages And Disadvantages Of Fast Payday Loans”
  1. Sending this to my sister! She loves these loans and as soon as she can retakes it out. Thing is though try to tell her is the super high interest, and when days late on a payment they have someone go by her door to talk. Almost like a loan shark. Yes they can be used but only if needed not just because its their and you can. Avoid them unless absolutely required, and pay it back as fast as possible.

  2. Which instant loan is the best to use? Not after one now, but always nice to know in case I start to fall behind on bills.

Leave a Reply

Your email address will not be published.