Payday loans are very helpful when it comes to paying our expenses. But these loans can also bring disaster to our financial health if we are not careful.

A payday loan is a short-term loan that is usually paid back within the next paycheck. It is mostly characterized by high interests which are paid back in two to four weeks after approval. It’s important to know what benefits and consequences these loans have before applying them.

Pros of Taking a Payday Loan

#1 The Easy and Fast Application Process

Applying for a payday loan is so easy. All you have to do is:

  • Go to the loan lender’s website and register or sign in.
  • Fill out the form given with correct details and submit it.
  • Provide the requirements, that is personal income proof, national identity and have an active account.
  • Wait for a response.
  • Once approved, automatic transfer of money will be prompted into your account.

The good thing about payday loans is that there are no extra charges. Once you provide the requirements and fill out the form correctly, you’ll be assured of loan granting.

#2 Speedy Approval Time

One advantage of payday loans is their quick approval time. Once the form is submitted, the response will be given after a few hours or one business day depending on the lender. Then the automatic transfer of funds will be processed into your account. That is why they are called online payday loans no fax instant approval.

Well, in case your loan is not approved, you still have adequate time to apply to another lender or use another alternative.

If you have bad credit, here is the good news. You are still eligible to be approved since the payday loan lenders don’t look at credit scores or reports.

#3 Account Security

You don’t have to worry much about your account safety since the accounts are encrypted. Your personal information will constantly remain private.

Also, since online payday lenders are regulated by national laws, they are aware that it is illegal for them to share user’s personal information with other people.

#4 Your Loan Limit Can Increase

Payday loans depend largely on an individual’s income amount. High-income users have a high loan limit. This means that if your income level increases, your loan amount will also increase the next time you apply.

But if your loan amount is small, this can serve as a disadvantage for you.

#5 The Loans Are Multi-Purposed

Unlike traditional loans, payday loan users do not need to specify the loan purpose. These loans give you the freedom to use them for anything you like.

Cons of Using a Payday Loan

#1 High-Interest Rates Involved

Payday loans interest range from 10% to 30%. According to Dave Ramsey, a professional financial analyst from the Ramsey show says that these loans charge an “interest of between 400% to 800% annually.”

Compared to other loans, this figure is much higher. And with the short repayment period, it may be difficult for most people to pay back the loan in time. This makes the debtors borrow other loans for repayment of outstanding balances leaving them in a debt cycle.

#2 Constant Disturbing Calls in Case of Default

If you default payments, expect sleepless nights due to constant calls from the lenders. The people that you recorded as the next of kin will also be troubled with ruthless threatening calls. That means you’ll be getting calls from two different sides: your relatives and the debt collectors.

If you still fail to pay, the lenders will take you to court where you’ll be forced to pay the loan with extra interests, not to mention that your credit score will be completely ruined.

Conclusion

With all the information both online and in books, you may be in a dilemma of whether to choose a payday loan or not. Looking at its advantages and disadvantages will help in decision-making.

Payday loans are very helpful when it comes to paying our expenses. But these loans can also bring disaster to our financial health if we are not careful.

A payday loan is a short-term loan that is usually paid back within the next paycheck. It is mostly characterized by high interests which are paid back in two to four weeks after approval. It’s important to know what benefits and consequences these loans have before applying them.

Author

A happy mom, professional article writer, SEO practitioner, blogger, guest blogger & freelancer. She's in digital marketing since 2018. She loves reading books and spend time with her family. Reach her on Email or Facebook

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