You probably have seen advertisements for payday loans on the television and internet saying that you can get cash now, and that the company wants you to get your hard earned money when you need it. Many people live paycheck to paycheck, and sometimes they need money before their next paycheck is available to them. This is where payday loans come into play. A payday loan is like getting part of your next paycheck early. You will have to repay that loan amount based on how frequently you get paid. Since you have to provide proof of employment, the loan office and yourself will set a date as to when the loan will be due based on when you get your next paycheck. Many people see payday loans as their only option when they are short on cash. However, before going in and getting an immediate payday loan, you should look at all of the pros and cons of getting one before deciding if it is actually the best option for you.
Many people get payday loans because of the advantage that the cash is sent to you almost instantaneously. You can get a check right there on the spot, or you can even get the funds put directly into your bank account. Usually, when people are in need of an immediate payday loan, they need the cash as soon as possible to cover a bill or an emergency. This is one of the advantages of an immediate payday loan, and one of the top reasons why people get them in the first place.
Another advantage that comes along with an immediate payday loan is that there are no credit checks, and you do not need to put up any security or collateral when getting this type of loan. Often times, immediate payday loans are called bad credit loans for this reason. If a person needs money for a bill or emergency before their next paycheck, they will not have to provide any credit information, which makes the process of getting the loan easier. If the borrower does not have outstanding credit, they do not have to worry about not getting the money they need when they need it.
Most everything can be done online nowadays, and the same can be said for immediate payday loans. This is another advantage of these types of loans. You can apply for them online, and get the money in your account without even having to leave your home. People like the convenience of this, and it gives them an array of options to choose from when finding a lender that works best for them.
Although an immediate payday loan can get you cash quickly and conveniently, there are some downfalls that come along with payday loans as well. One of these cons is that there is an extremely high interest rate on these types of loans. The loans are short-term, so in order to cover the cost of the loan, the lender must have high interest rates. Finance charges can be anywhere from 15%-30% for a loan that is just for a few weeks. If you were to look at a loan with an annual percentage rate, the rate would be nearly 800%. So, even though you will pay back the loan amount with your next paycheck, you will end up paying an extremely high price because of the fees that come along with it, which makes the loan almost pointless since you have to pay more for your money.
There are even more fees applied to the loan if you do not repay it in time. Most lenders will offer an extension period if you are not able to repay the loan, but the fees will quickly add up since they will have to charge more if you miss your first due date. If you cannot pay your loan back for a long amount of time after the original due date, you could end up paying triple the original loan amount.
Another disadvantage to payday loans is that they can affect your ability to borrow in the future. If you were to go to the bank to get a loan for a car or home and they see that you have taken out a number of immediate payday loans, they may refuse to give a loan to you. Getting a payday loan can look bad to most lenders because it seems that you are not financially responsible with your money, and therefore you may not be responsible with their loan.
People look to payday loans for a number of reasons. There are many alternative ways to getting money when you need it, and there are ways of learning how to budget your money. These ways may be better than getting a payday loan. However, it is sometimes unavoidable, and people have to get a loan. If this is the case, make sure to weigh the pros and cons and see if the immediate payday loan is worth it in the end.