Should You Ever Take Out a Payday Loan?

Should You Ever Take Out a Payday Loan

Not all consumers can take out a loan from a bank, there may be a lot of reasons, but most often these are problems with credit history. If the client has previously had trouble or has several other outstanding loans, then the bank may refuse to lend money. In this case, you can take out a guaranteed payday loan, which is becoming more and more popular every year. What are payday loans and how do they work? What are their pros and cons? We will consider in more detail below.

What are payday loans?

Payday loans are short-term small-dollar loans issued by private organizations. The main advantage of such loans is relaxed eligibility criteria. Private organizations are not interested in the previous relationship between the client and the bank, and therefore this is an excellent option for those who have been declined a bank loan.

Payday loans are typically repaid within 1-3 weeks. Such a loan is approved in a few minutes, with no paperwork. The only drawback of such loans is a small amount of money accessible – between $100 and $1,000.

Today, a lot of financial organizations are engaged in the provision of such services.

How much can you borrow?

Most private organizations offer an amount not exceeding $1,000, but the conditions can be revised on an individual basis. Entrepreneurs who plan to expand a business can count on a larger amount, but in this case, the organization may put forward additional requirements as guarantees.

Each state has its own laws and regulations related to payday loans. For example, in California, payday lenders can loan up to $300, in Virginia – up to $2,500, in Alabama – up to $500.

How can I get a payday loan?

It is not difficult to find an organization dealing with lending today; it is enough to search the Internet for offers by state. All that remains is to compare the offers.

Some companies issue loans right in the store, others offer online applications. The easiest way to get the most affordable cash advance is to apply for it through

Pros and cons of the product

The main advantage of such loans is the speed of processing and funding and the relaxed requirements. Since money is often needed urgently, such services are in great demand today, but you should beware of scammers and unfavorable conditions because you can often become a victim of fraud.

Such loans are the only alternative for those who have problems with the bank, payday lenders will approve your application without problems. Many clients are satisfied with the speed of loan processing. The client does not need to prepare documents, wait for the bank’s decision, money can be received remotely within a few hours.

If you cooperate with trusted organizations, then you will get no problems with payday loans. The main thing is to find a good offer and a reliable financial institution.

4 tips from financial experts on how to use payday loans and not regret it

  1. Pay off the debt in a timely manner. The problems of most borrowers begin after payment delay. Some borrowers simply forget to make a payment on the due date, others have no money. This does not really matter for a lender: as soon as a delay occurs, the organization begins to apply penalties. The legislation limits the maximum amount of interest, fines and forfeits. It cannot exceed the initial loan by more than 1.5 times. In case of delay, the penalty cannot exceed 20% per annum and will be charged daily. Besides, the company will continue to charge the contractual interest every day. As a result, the amount of overpayment will turn out to be large, even taking into account the restrictions established by law. Additionally, payment delays negatively affect the borrower’s credit history and make it difficult for a consumer to get new loans. In addition, if you delay your payment, the lender will have the right to involve collectors to work with debt or initiate a forced collection of debt through the courts;
  2. Choose the lender carefully. It is worth studying the reviews of borrowers to assess the quality of the company’s work, and sometimes learn about the dirty tricks;
  3. Read the contract carefully before signing it. You should carefully study all the documents, regardless of whether a loan is issued in the office or online. Some companies include an insurance program and other paid services into the agreement. The client has the right to refuse all additional services. But sometimes insurance allows you to avoid problems with debt repayment in case of force majeure;
  4. Do not hide from the lender in case of problems. If you have problems with repaying the loan, you’d better contact the lender immediately and start looking for compromises. Debt restructuring may be a way out of the problem. But the lender will be able to offer it only to the borrower who is ready to make contact. Payday loans can become a real lifesaver when the money is needed urgently. But you need to use them wisely.


finance, loans online, money, payday loans