Pros And Cons Of Payday Loans

Payday loans are unsecured loans that almost anyone can get.  There are few requirements to getting these types of easy qualifying payday loans, and they can really help in a money emergency.  However, there are a few pros and cons of payday loans that people should be aware of before they accept one.  Knowing in advance what a payday loan entails will help you make the right choice when getting one.

No Credit Check

One of the biggest reasons that customers choose to get a payday loan is because there is no credit check involved.  Many people nowadays have poor credit or no credit at all.  Getting a traditional loan from a bank will not always be an easy way to go.  A bank will require credit checks, and may easily turn you down if your credit is not up to par.  With a payday loan, it doesn’t matter what your credit looks like.  There are absolutely no credit checks, so these easy online payday loans are completely open to everyone.

It is possible that a payday loan company may run a check to see if you owe another payday lending company money.  Most companies will not lend out money if you have an outstanding balance with another place, even a rival.  However, this is the only check they will perform.

Few Requirements

A payday lending company asks for very little in the way of requirements to getting a loan.  The age for a loan is 18 years and older, and you will need to show proof of identification.  You will need to have a valid checking account, although some companies do allow you to get a loan if you have a savings account.  You will also need to have a job, and you will be required to show proof of that through recent pay stubs.  That’s generally it - almost all companies require these few items to get a payday loan.

You may also be asked to bring in a current bank stub if you get a loan at a physical office.  When you are approved, a blank check may be required to be filled out to the company.

Simple Procedure

The procedure to getting a payday loan is a fast one, and one of the major pros of these types of loans.  Most lending companies have websites that you can go to and download an application if it is your first time borrowing.  You can then fill this out at your leisure, so it is ready when you go to the office.  When you get there, you will hand it over to the cashier, who will go over it to make sure all the information is true and correct.  They will verify your employment and bank information to make sure it is correct, as well.

If you are approved for a loan, you will simply need to fill out your check.  This will be for the amount you are borrowing, plus any applicable fees.  This will be a post-dated check, made for the date of your next paycheck.  Hand this over, and the cashier will give you cash.  It is that simple.  Most people have their money in less than one hour.  Those who have had many consecutive loans with the same company will typically have shorter wait times, as all their information is already in the computer.

Online Access

Another plus of payday lenders is that you can access them online.  There are literally hundreds of companies that offer the service of easy payday loans.  Many offer a no-fax procedure, which means you do not have to send anything into the company.  The requirements are usually about the same as above.  An online company will have you fill out a form, and depending on the type of business, you may need to fax in some paperwork.  After that, you will be approved or denied your loan.  If approved, you will get the money by way of a deposit into the account you listed.  Generally, you will receive your loan by the next business day.  Some companies will get your money to you overnight, provided you get the loan application in by a certain time during the day.

High Rates

For all the positive reasons there are to getting a payday loan, there are still some things to look out for.  One is the rate of interest they will charge you.  All companies differ in their fees, but more than likely you will pay between $10 and $30 for every $100 that you borrow.  This fee will be added onto the amount of the loan that was borrowed when the due date comes.  While this may not be a bad fee for a one-time loan, after many loans have been taken out, it can really add up. 

The finance fees will also depend on the state that you reside in, as well as the individual company.  It is best to shop around, so you can get the lowest rate possible for an easy payday loan.

Money Trap

Payday lenders are great when you have a money emergency.  But they can really start to eat up the money in finance fees if you start relying on them too much.  Many people find that after they pay off their payday loan, they are broke again.  This results in another loan.  Some companies will give you a higher loan amount after you have done business with them a certain amount of times.  This means that the more you borrow, the more your fees will be.  For some, it becomes a vicious cycle of borrowing money, only to pay it back to borrow it again.  It is recommended to only use a payday lending company in the event you have a money emergency, and to borrow the smallest amount possible.
The services of a payday lending company can be a lifesaver.  Shop around for the best rate and read the fine print, so you know all the pros and cons of the situation you will find yourself in.





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