Payday loans are often called the last resort of getting money. When people who have maxed up their credit cards and have bad credit are desperately looking for money, payday loans are their answer.
A payday loan is sometimes called a cash advance, check advance, post dated check, or deferred deposit check loan. The federal trade commission of the United States calls it costly cash because of its principles. It is basically a short term loan with very high interest rates.
A payday loan as said earlier is a very quick way of getting loan. If you are really in tight spot and would need the money quickly a payday loan is the best option. Getting a payday loan only does not go to the usual process of long red tapes. Just imagine if you have an emergency hospital bill to be settled and you don’t have the money. A payday loan will help. To some people or to some situations getting a payday loan can have more advantages than disadvantages.If
you don’t see yourself getting a payday loan here are its benefits:
- Application can be done on the internet, phone or personally.
- You can prevent the hassles one can experience when applying for a credit check.
- Within 24 hours the loan proceeds are deposited into your bank account
- You won’t have to pay any upfront cost which makes affordable for the moment being.
- The person’s involved in the deal will only be the lender and you which make it a very cautious deal.
- Just like any other lending institutions, your financial information will also be protected. They are not supposed to share it with anyone else.
Payday loans may be a quick easy fix to get cash but they also present their own disadvantages. Payday loans are even considered notorious by others because they take advantage of those who are desperately in need of money. People who offer payday loan say they only cater to niche market.
For people who are not able to pay the payday loan, specifically on their next paycheck. Those are the people who will be mostly at a disadvantage. When they are not able to pay the loan, the payday lending company will allow them to renew the loan. This is called rolling over the loan. However, when the person chooses to renew the loan, he or she will have to pay more.
Here’s an example. You borrow a loan worth $100 and pay it for 14 days or until your next payday. You will then write a check worth $115 because the fee will be included. The annual percentage rate of that loan will be 391%. Yup, it’s outrageously high. If you can not pay the $115, you can roll it over. However if you roll it over 3 times the interest payment you will be paying will $60. It will be more than half of the loan you borrowed.
If you are getting a payday loan, think about it very well. If you are not capable of being able to pay it immediately, you should try to find other options.