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
It 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
Despite 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.
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 advance 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 the State.
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.
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. Consider other possible solutions such as borrowing from a friend or relative to get a lower rate.