The Pros and Cons of Payday Loans
Paperwork and tiresome waiting – this is what awaits a person who decides to take out a bank loan. It will take a lot of time and effort to collect all the necessary papers. A payday loan can significantly reduce the amount of required documentation and the waiting time for a bank decision.
A payday loan is a good opportunity for individuals who urgently need a small amount of money and which can be returned as soon as possible.
Advantages of payday loans
There are several advantages of this type of lending, which attracts consumers:
- The first advantage is that almost all consumers can get approved for a payday loan, including those with bad credit history;
- There is no need to seek guarantors or collateral;
- It is possible to repay the loan ahead of schedule and reduce overpayment;
- Loans are issued to people who have reached the age of 18 years;
- To apply for a loan, you will only need a document confirming your identity;
- It will take 5-15 minutes to complete the application;
- If approved, you will get the funds within several hours.
Based on the above-listed advantages of microloans, it seems that this is a rather attractive type of lending, but do not forget that there are also disadvantages of this product. You need to think carefully and weigh all the pros and cons before applying for a payday loan.
Are there any pitfalls?
Below are the things that need to be taken into account by a borrower who has made a decision to take out a payday loan:
- Microfinance organizations specialize in issuing small amounts of money, which means that you can only get a loan ranging from $100 to $1,000;
- One of the disadvantages is a high interest rate, which also depends on the loan amount. But it is also worth taking into account the timing of repayment, which makes these rates reasonable enough;
- Terms of loan repayment. They are extremely short, to be more precise, from a couple of days to 4 weeks;
- Non-payment or delays incur penalties and fines, and they are significant;
- And finally. If you are a hard-core defaulter, then wait for an “invitation” to the court and calls from collectors.
Now you know all the advantages and disadvantages of payday loans. Of course, it’s up to you to decide whether to use this service or not. In some cases, such an advantage as a quick application with no paperwork involved can become a disadvantage since a person with unstable income may exaggerate his/her capabilities and get into a debt trap. Calculate your capabilities correctly and take your time with such a serious decision!
finance, loans online, money, payday loans