Payday Loans: Pros and Cons
Our When there are a few days left before the paycheck, and the money is already running out, the question arises: what to do? Or when the car suddenly broke down. Sometimes a small amount of money is urgently needed because you have been invited to a party and need a gift. It is in such cases that a payday loan comes to the rescue.
What is a payday loan?
Our A payday loan is an unsupported short-term loan with a small limit. The most common payday loan is $500 or less, but in general, you can borrow up to $1,000. Loan terms can also be different, but the most common options are 14 days and one month. Usually, to get a payday loan, you only need an ID and a bank account. The application is considered in a couple of minutes, and if approved, the money will be credited to your account within one business day.
Pros of a Payday Loan
Easy Access
Our Perhaps, getting a payday loan is the easiest of all existing types of loans. You can apply online anytime, anywhere. It takes very little time for its consideration and approval, often just a few minutes. The money will be in your account on the same day or the next business day, maximum.
Minimum Requirements
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Most likely, you know how many papers you need to collect to get a loan. But this does not apply to payday loans. To apply, you need to meet only a few modest requirements:
Available for Bad Credit
Our If you have ever taken a loan, such as a personal one, you know how carefully banks check credit history. Payday loan lenders don't do that. So no matter how bad your credit history is, you can still get a payday loan. Most lenders are interested in your income here and now and not past loans paid or not.
Cons of a Payday Loan
Cost
Our Payday loans are expensive. On average, annual percentage rates on them are 400%, but this number may vary depending on the state. By comparison, the APR on credit cards can range from 12% to 30%. Due to the fact that the amount of a payday loan is usually small, this does not seem to be as tangible as if it were a personal loan. Nevertheless, it is really expensive.
Access to Your Bank Account is Required
Our Often, payday loan lenders require access to your account. This way, they can check your income, deposit borrowed funds, and withdraw money when it's time to pay.
You Can Get Into a Cycle of Debt
Our There is always a risk of falling into a debt cycle when it comes to payday loans. Every time you fail to repay your last loan and have to switch to a new loan, additional fees add to your out-of-pocket costs. According to statistics, every fourth payday loan is taken nine times.
