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Payday Loans: What You Need to Know About Its Pros and Cons

Payday Loans: What You Need to Know About Its Pros and Cons

loansPayday loans are perfectly fit for people who are in need of quick cash for to cover personal use and other emergency expenses. It is considered as a short-term and high-interest type of loan. Usually, the loan ranges from $50 and $1000 and people can get it from payday lender, a company that frequently provides other convenient financial services like utility bill paying, foreign currency exchange, and license processing.

In other term, it is also a cash advance taken against the borrower’s next paycheck provided to them by a third-party lender. Sometimes, payday loans can be a bit pricey via the collected fees and other interest rates.

In acquiring cash advance service from payday lenders, pros and cons are always present. Before jumping into payday loans online, weigh and consider the options. Read them below.

PROS

Easier Application. In filling out payday loan application, it will only take 30 minutes because the transaction is mostly done online. No need to fill in using pen and paper, just a few clicks on the PC or smartphone will do.

Fast approval. After filling out the application form, there’s no need to present credit check and collateral to secure the loan. Normally, poor credit scores are not a hindrance to get a loan. No credit checks mean more people are eligible.

Quick Cash. In a typical payday loan setup, borrowers will get their money within 24 hours. There are times that the borrower can get the money within an hour after filling out the application form. It’s really easy to get the cash most especially if you have completed their requirement.

Protecting the credit rating of borrowers. When opt to take payday loan to help you in a few days in covering up your financial duties, borrowers can avoid having a mark against their credit rating.

CONS

Requires a short period of time only. Payday loans are only dedicated for a short period of time, just to cover up instant emergencies such as paying bills. So, if you are needing bigger loans that will last up to several months, this is not for you.

It involves fees and interest payments. The fees you need to pay for the payday loan are quite costly compared to a standard bank loan. If the borrower is unable to pay the loan in full on a due date, the fees may double.

Loans are only relatively small amounts. Normally, payday loans are issued for amounts of up to $1000. Money lenders will not provide larger amount even if it is only for a short time.

Bank account is required. Payday loan companies think differently and bank accounts are necessary upon releasing the money. It’s a play safe strategy for them.

The pros and cons listed above contain all the information that borrowers need to understand how payday loans work. Payday loans can help in covering up short-time financial crisis, but they cannot replace a long-term solution to cash flow problems. Payday loans are only perfect solutions to pay unexpected bills and cash emergencies.

This is a guest post from Candice Larson. She is a resident blogger for Speedy Money Payday Loans. She likes writing about business and technology. Currently, she juggles her time between graduate school and working for advertising firm.

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