There are times that we need cash immediately. It could be for different reasons. It could be because of debt. It could be because we’re in a hurry to buy something, or it could be because the whole world is undergoing a crisis. In dire times like we are experiencing at present, money or our source of income is unstable and unsecured, and the economy is also suffering. Hence, having cash on hand is crucial for survival. When we are under conditions where we need cash right away, applying for loans from banks won’t cut it, as it takes a while to get approval. Banks do a lot of background checks, and it will take weeks or more for your loan to get approved.
There is such a thing as payday loans, this type of loan is a quick loan, and that goes immediately into your account. A payday loan is a small, short-termed, unsecured loan. It will help you to get cash immediately. But you should first know the advantages and disadvantages before applying for one.
Advantages:
It’s Fast and Hassle-Free
Payday loans are easy to access and need only a few requirements. You can get approval and have the cash by hand within 24 hours. As for requirements, generally, all you need is to be of age (18 and above), have a government-issued ID, regular source of income, and have an active bank account. They also don’t check your credit, unlike banks, so it doesn’t take a while.
It’s an Unsecured Loan
Unlike traditional loans, such as car loans, housing loans, or personal loans, when you are unable to pay your lender for the payday loan, they cannot seize your property. Of course, this entails other consequences which will fall under disadvantages.
Disadvantages:
It’s Expensive
If you apply for a payday loan, make sure that you can pay them back right away. They have a high interest rate, ranging from 28 to 36%. That’s why they say that a payday loan is only a good idea for unexpected payments, but you don’t have the money currently, yet it’s coming from somewhere else, which will able you to pay for it immediately.
It’s Risky
A lot of borrowers are unable to repay the loan in the short term span given. Usually, payday loan lenders have unjust, deceptive, and expensive terms that could lead the borrower into a cycle of debt. Getting this type of loan might be fast, but the consequences it entails are very undesirable. Lenders will have access to your bank accounts (this is one of the terms you have to agree with). Many payday lenders will require you to provide a postdated check once you get the loan. If you don’t have sufficient money in your bank account when they cash the check, you could be facing costly overdraft fees and bounced check fees. These are extra fees that will add on top of the high-rated interest. And they can also sue you if you are unable to pay them back.
Payday loans are very tempting, especially when you’re short on cash, being as it is quick and hassle-free. Still, it is important to sort through other options and to think carefully when applying for payday loans. When it comes to financial matters, it is always important to think twice.