Payday loans are categorized as short-term loans and can be easily obtained by borrowers that would require immediate fund resource. The usual reason for taking out a payday loan is to cover emergency expenses. With a short-term repayment period, payday loans typically come with higher interest rates than other loans.
There are several negative connotations about payday loans but for the right type of borrowers, payday loan is a saving grace.
Easy And Quick Application Process
Most payday loans are available online with lenders having less stringent requirements than traditional financial institutions. Most of these lenders offer financial lending products for all credit types and the application process is done online, which is very convenient for borrowers. An online form must be submitted indicating personal and financial details. From there, the lender will gauge if a borrower is eligible for a payday loan. Usual processing time is within a day or less.
Ideal For People With Bad Or Poor Credit
A payday loan is an ideal short-term loan for borrowers that have poor or bad credit scores. Approval of the loan will solely be based on borrower’s employment history and paycheck details. This is a good solution for those who are in need of immediate cash with no other options available due to their credit standing.
Pretty Straight Forward
The processing is convenient with easy to comply requirements, payday loan is a short-term loan with straight forward terms. Borrowers will know exactly how much they will pay on the maturity date which typically runs from 2 to 4 weeks. The specific date and the amount are set into a single repayment term.
Applicable for Emergency Needs
More often than not, most payday loans are used for emergency situations such as immediate medical treatment, unexpected home or car repairs or for covering immediate bills. Basically, money from a payday loan can be utilized for any purpose.
Lesser Credit Impact
A short-term loan such as payday loan has a lesser impact on credit standing since borrowers are fully aware of the specific terms that must be paid off in as little as two weeks or a month. This type of loan also does not require any collateral. There will be less worried on how this loan will impact one’s credit unlike long-term traditional loans.
Just like any other type of loans, payday loans have their own pros and cons. Before you apply for a payday loan or any kind of loan, make sure you have weighed their advantages and disadvantages based on your current financial situation. There is no one-size-fits-all in a loan. You will have to study and analyze what would be the impact if you get this or that loan. In the end, how you would use your borrowed money matters. Where you put them will determine if you handled your finances well. When you are able to spend the money on something that generates income, like a business or investment that grows over time or to your most essential needs for your daily living, then you will not regret paying for the interest, at all.