Payday loans are used by numerous people these days, but should they be? Let’s look at the cold hard facts and learn what should be known before signing your name to the dotted line.
What is a Payday Loan?
It is available to individuals who are employed or otherwise have a regular source of income. It is a short-term borrowing arrangement that is made for a period of one to two weeks in most cases, with repayment expected on your next pay period. An interest fee is also charged to the initial value.
Are there benefits?
There are many benefits found, especially for people who may have credit problems. There isn’t a credit check, and lenders are not concerned with your prior credit history.
They are fast and easy to obtain. Proof of employment and income should be provided, as well as a valid driver’s license. In many cases a checking account is also required, but not always. Applications can be completed in person or online, with loans available same and next-day if you are approved.
They are non-secured so there’s no worry of placing up any collateral, and you can also reap the rewards of fast, easy approval without any hassles. They can help in emergency situations and eliminate the need to ask friends or family for money.
What about Downsides ?
Most people with negative marks to say about the payday loan stem from the interest rates that are charged. It is true they can be quite excessive. In fact, interest rates as high as 300% and more have been reported with some contracts.
For some people the fact that it must be repaid, in full, so quickly can be a great disadvantage. So often people try to pay their note and find themselves in an even more difficult situation later down the line.
The Bottom Line
Payday loans have both advantages and disadvantages. While they may not be right for everyone there are certainly many people that depend upon them when times necessitate it. Look at the options available and then decide whether it is something that is right for your needs. Always remember to use the loans responsibly, and only in those situations when they are absolutely necessary. They can certainly benefit you when used responsibly.