Payday loans are time and again marketed as the simplest way to obtain quick cash for those who need it to fix some short-term financial crisis. For instance, when you notice that the roof of your house is leaking during the rainy season and you do not have any spare money to fix it, payday loans are to bail you out from search potentialities. In real sense however, most people tend to neglect the negative features associated with them and easily end up riddled in a vicious cycle of debts. Consequently, before using this borrowing facility it is imperative that we have a concise understanding of both its upsides and downsides.
Upsides
The below features make payday loans a formidable financial service:
Only A Bank Account With A Solid Income Is Required
The minimum threshold required for one to qualify for a payday loans is very simple. You should have been in employment for a minimum period of three months and a hold checking bank account whereby your employer deposits your wages or salary. Pay day lenders will offer you up to 80% of your salary. Self-employed clients may also qualify as long as they produce evidence of a solid income while other lenders are also known to advance loans to applicants receiving alimony payments.
The Service is Accessible Online
Application for payday loans can be done at the comfort of your home. Most lenders ensure that loan requests can be made from their official websites. After filling their simple online application forms, money will be sent to you right away or after two business days depending on the type of lender.
Lenders Do Not Check Your Credit History
Even if you have a poor credit history, the approval of your loan application does not depend on it unlike most normal financial institutions. You will be still legible for application.
Downsides
The following features make payday loans not a recommendable source for financial assistance:
High Interest Rates
Significantly high interest rates are charged on loan advancements. For instance, some lenders will give you $100 for a two week period and demand that you pay $130 when it matures. Others may lend you $1000 and expect $1500 on return. Note that these figures are general figures; some lenders may charge higher rates than these, exclusive of a loan processing fee.
They Take Full Advantage Of Defaulters
Default payments are basically what keep payday loan facilities in business. Defaulting of their loans can easily transform a small loan request into a gigantic debt. Some lenders are known to charge up to double of the initial request within a month of the due date. The longer the loan remains unpaid the faster the debt keeps growing.
They Give Lenders Access To Your Bank Account
Lenders use your bank account as a cover against loans you apply for. They necessitate that you allow direct debit authorization to your lender so that they can withdraw the reimbursement amount straight from your bank account when the loan matures. In instances whereby there might be inadequate funds in your account, heavy fines will be promptly imposed.
In conclusion, before requesting for payday loans, make an informed decision by taking into consideration the above pros and cons. This way, you will be able to comprehend whether they are suitable for you or not.
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