Instant Cash Payday Loans Make Sense

A quick infusion of cash is usually necessary to alleviate short-term emergency financial situations. And these cash needs are not likely to equal the GNP of even a small equatorial nation, so a long-term loan is not really required. Not many traditional lenders are likely to go for loans that are for less than $1500. And that is when instant payday loans make sense.

What Is an Instant Cash Payday Loan?

A payday loan has been developed to help folks put to rest expenses that amount to less than $1500. This amount tends to the outside though. Some lenders will not lend that amount for new customers.

Once you have established a good repayment record with them, they will be willing to lend you more the next time you need a cash infusion. Understand that these loans do not require collateral (valuable property such as real estate or a late model car) to secure the loan. They do not require a credit check.

Instant Cash in Your Bank Account

Lenders are cautious in that they check your credentials enough to be somewhat reassured that you will be able to pay them back according to terms in the loan contract. They can often do this without you having to fax in any documents. Usually, they can establish identity, work history, and residency online.

Why Instant Cash Payday Loans Have a Bad Rep

Payday loans get a bad rap because most critics look solely and imply at the annual percentage rate (APR) advertised. What the critics should really be looking at is what the loan is going to cost in real terms, by checking out the total interest charges. Now this may cause you to wonder just what is an annual percentage rate or APR.

An APR, along with any other charges expressed so, is the APR. Using a APR is a common way of comparing loans that are alike except paid back over different lengths of time. But why is it useful to compare financial instruments that seem to be so dissimilar? Perhaps by going through the figures it will be easier to understand.

Hypothetical Situations

Say you were able to take out a personal payday loan for $500 and it has an APR of 19.9% and you will take 36 months to repay it. It would cost you $653 to repay, or 31% being added to the cost of the payday loan. The extra amount would be the APR.

Now, say you take out the same loan only pay if off over 60 months. The cost of the loan would be $766. This would be an interest charge of 53%.

Here's the kicker on payday loans: If you took $500 it would cost you $625 to repay at the APR of 1737%. Yes, this plays out to only 25% being added to the loan.

Short-Term Instant Payday Loans Do Make Sense

So, there you see laid out the fact that the APR for the two multiple payment plan loans are exactly in line, but the amount repaid and the specific APR charged put as the percentage of the amount borrowed in different to quite a degree.

They both also seem to cost much more than a payday loan but the APR equates to singing a different song. So if you only need a pittance to get you over a short-term financial bump in the road, you should side-step the APR and take a close gander at what the loan will actually cost. And, it is evident that a short-term payday loan is a very viable way to go. They do make sense.