Advantages of Payday Loans
When it comes to payday loans, there are both advantages and disadvantages associated with them. It is imperative that an individual become educated and aware of both the advantages and disadvantages before signing up and applying for one or more payday loans. In fully understanding both the pros and cons the applicant can make informed and knowledgeable decisions during and after the application process.
Advantages of Payday Loans
When applying for payday loans, (also commonly called a cash advance), one can immediately begin to see the pros associated with getting a payday loan. First, payday loans are accessible in amounts up to as much as $1000.00, and can be received within one business day. Payday loans are given to the borrower based on the proof that the individual will be able to pay it back with an upcoming payroll check.
Next in terms of advantages is that just about anyone can be quickly approved for payday loans. Consumers with bad credit ratings are not banned from applying and being approved. A borrower may have to write out a post dated check for the amount of the payday loan, plus fees, and provided it to the lender as a good faith action and a way of securing the loan transaction. The check is later used to claim the loan debt from an upcoming payroll check deposit. Further, loan extensions are possible for those that find it difficult to meet the payments necessary by the due date agreed on.
Application processes are amazingly easy when it comes time to apply for payday loans too. Online applications are fast and only take a few minutes to completely fill out. You may or may not require additional documentation, depending on what payday loan lender you are working with.
Disadvantages of Payday Loans
There are plenty of advantages associated with payday loan options, but there are disadvantages too. For one thing, the interest and fees applied to payday loans are pretty high: as much as $15 to $30 dollars on every $100.00 that the individual borrows. If the borrower asks for an extension the interest rate is even higher. The high interest rates are applied because payday lending is a risky business and it is, unfortunately, a business where many borrowers do not pay loans back on time and default on loan obligations. Nonpayment also equals harsh consequences in terms of additional fees and potential criminal charges.
It is easy to dig a deep hole in terms of debt with payday loans. It is not uncommon for borrowers to repeatedly turn to payday loan lending options in order to start getting more and more loans to make ends meet. Each loan has high interest so the borrower loses out in the long run.