It happens to all of us at least once. We fall behind on our bills and our hours at work get cut. We have a slow month in our business. We have some unexpected medical bills. Many adults face times when they are short on funds and need to come up with cash fast. Some people consider getting payday loans when this happens. Payday loans are exactly what they sound like. They are loans that people get when they have an expense to cover. They usually pay the loan back with their next paycheck. They can be a great way to get out of a temporary cash flow problem. They can also lead to big problems if they are abused. We will discuss the good and bad points about this kind of credit.
They Don’t Require Collateral – When you go to apply for most loans you need some form of collateral to secure the loan. Most credit options only require you to have an active checking account. This is important for people who do not have access to things they can use as collateral. This allows more people to qualify for a payday loan when they have a short-term cash flow problem. The fact that no collateral is required makes them attractive to low income individuals.
Available To People With Less Than Perfect Credit — Most of the time when people have a cash flow problem, they also have a low credit score. They are available to people who do not have perfect credit. People with bad credit do not have to worry about losing their home because of a low credit score thanks to the payday loan.
Quick Approval Time — The last thing you want to do is to have to wait a long time for your money when you are faced with a situation where you need cash fast. They usually have a short approval time. Many times, you can have your money the same day you apply. This makes them much more attractive than other types of credit.
Short Repayment Window — One of the bad things is that they have a very short repayment window. You usually have to pay them back with your next paycheck. This can be a problem if you do not have the money in your paycheck to cover your debt. You will still have your regular expenses to cover plus the expenses associated.
Higher Interest Rates – Another thing to consider when you take out a payday loan is that you will usually wind up paying more interest than you would with other loans. This is because they are considered riskier for the lender. This means you’ll wind up paying more when you have to pay the loan back.
The bottom line is that you have to make up your own mind whether or not getting payday loans is the best choice for your current financial situation. If you think the positive points outweigh the negative points, then you should go ahead and apply. Make sure you read all of the documents presented to you carefully before you sign anything. Ask questions about anything you do not understand. Getting payday loans do not have to be a financial disaster. The most important thing to remember about a payday loan is that it is a temporary fix to a short-term problem. You should not be relying solely on payday loans to cover normal everyday expenses. They are best for emergency situations.