Pros and cons of payday loans

Payday loans are a common emergency loan for most people. Their convenience and easy access makes them convenient for most people. People prefer payday loans to other form of loans because its uses are not restricted and you can use them for any financial emergency. Before applying for a payday loan you should educate yourself on the benefits and repercussions of borrowing this type of loan. Below are some of them

The advantages

Pay day loan applications are approved almost instantly. The process is quick and simple. You won’t spend a lot of time online filling long firms like in traditional loans. The best payday sites disperse the funds within minutes while the slow one take up to two days which is still faster than conventional loans.

The whole process of application and registration is doe through online pay day sites.  Unlike in banks, you won’t need to make appointments and travel for hours only to stand in long lines and fill long forms.  Payday loans are very convenient all you do is register online and you are good to go. When your loan request is approved, the money is sent to your bank account and you can withdraw over the counter or through ATM. The money from payday loans has no use restrictions

All you require to set up a payday loan account is a legitimate Identification card to prove that you are 18 and above and a registered bank, account where they can withdraw and accredit the loans.  Strict payday lenders ask to see a paycheck before they can approve any loans. As long as you can prove you have a consistent income, you are guaranteed to get a loan.

When you pay back a payday loan early or before the deadline, you qualify for a higher loan automatically. The more you borrow and comply with the payment rules, the higher the loan limit becomes.

The disadvantages

Payday loans are very expensive compared to other loans. The interest rates on payday loans are very high. The interest amount is imposed on the loan as soon as you receive it.

Most lenders have repayment deadline of between 2 weeks to three months. If you don’t pay your loans on time you can face major issues. For one, when you don’t meet the deadline, interest rates start increasing subsequently until you pay the whole loan off.

Payday loans may affect your credit card report. They are not directly linked to credit cards but their transactions can be found on bank statements.  Credit card lenders can sometimes link your bank statement to your credit card statement. This way when you have late payday loan payments, it will also reflect on your credit card. The more you delay the payment, the worse the report gets consequently ruining your chances for getting bank loans.

They are easily addictive, once you pay your loan and the limit increases, nothing will prevent you from taking the loan to increase your next limit.

 

Payday loans can be very convenient if you need money for a financial emergency. If you can manage without the loan, you should avoid it at all cost by taking better alternatives.

Categories: Pay Day Loans