A payday loan is a quick fix type of loan; you will have the money you want hassle-free. However, it ties with some drawbacks that require you to be cautious. You can always take out a payday loan, but make sure you only use it for necessity and not for luxury expenses. Also, you have already gone through all the possible resources to borrow money. That way, you know that taking out a payday loan is the only option left for you.
Pros of taking out a payday loan
Here are the good points in taking out a payday loan, and some of these reasons are so attractive that they draw many individuals to take out this type of loan these days.
1. Easy application
Many lenders who offer 100 dollar loan are available 24 hours a day, seven times a week, and even have online applications and websites. Applications are easy, and approval is done immediately, making this type of loan appealing for people who are in dire need of cash.
2. No strict requirements
One of the reasons why payday loans become an easy option for an individual who needs instant cash is because it requires fewer requirements. Unlike traditional loans, they require a lot of requirements to verify your ability to repay the loan. Payday loan on the other hands needs minimal documentation.
3. No credit check needed
Another good thing with a payday loan is if you have a bad credit history or have a low credit score, you can still actually get one. For payday loans, no credit check is needed. This reason makes the payday loan attractive. Also, there are already many online lenders that offer payday loans for bad credit.
The Cons of a payday loan
If there is an advantage there are also disadvantages in taking out a payday loan and here are some of them:
1. High-interest rate
Owing to quick disbursal and minimal documentation, payday loans have higher interest rates as compared to other loan options.
2. Time constraints
Besides high interest, payday loans are often available for a shorter duration. Although some lenders offer credit for up to 3 months.
3. Repayment Process
Some individuals also don’t like the repayment process of payday loans as the lender gets access to your bank account and collects payment directly from it.
Payday loans are not as bad as the press has made them be. Even in some western countries where these loans are popular, some borrowers find these loans useful rather than abusive. Furthermore, payday loans are regulated closely by government agenciesto protect consumer interest. It is useful when you know how to manage it and when to use it. If you’re a smart borrower, you’re unlikely to fall into a debt trap.