Financial security is something that most of us would call an outright myth. With the way the economy is today, it’s hard enough to handle your day-to-day finances and make the proverbial ends meet, much less attempting to get some money put away for a rainy day.
It doesn’t matter who you are and is doesn’t matter what your current situation is, you can bank on one thing: life happens.
Whether you’re in need of some emergency cash in a pinch or just need a little cash-flow injection to get you through to payday, some turn to an online cash advance in order to receive the necessary funds.
There’s a ton of information about the payday loan business out there, and it’s mostly an equal mix of positive and negative. You never really know who’s being honest with you and who’s trying to sell you on something.
Let’s take a look at the pros and cons of a payday loan to help you make a better informed decision.
Pros:
An online cash advance is quick and simple for most people. If you’re a military person on leave and need an injection, there are niche services offering military payday loans to you that will clear based on your service – and likewise with other markets/professions.
If you have a job or, in some cases, a car title, then you can get a payday loan through a quick application process and have the money wired to a local bank (equivalent) near you. However, a payday loan isn’t considered a secured loan that you will always need collateral for. The idea from the lender’s perspective is the knowledge you have means of repaying the loan.
The approval process is usually less than 24 hours and your money will be sent right away. The ease, convenience and speed of this type of loan make it an extremely popular choice.
If you happen to have bad credit or basically “no” credit and are still approved for a payday loan, prompt and hassle-free repayment will bode well for your overall credit score.
Cons:
Payday loans are short-term loans, meaning they’re a relatively low amount and need to be quickly repaid. On average, your max loan amount is going to be around $1,000 USD.
Because of the high-risk nature of the loan and the lower amount, short-term loans require a high interest rate of repayment. You will be paying a lot more back than what you received. And if you happen to miss a payment, the rate may dramatically skyrocket on you and leave you in immediate arrears (particular contract dependent).
Payday loans are often the last lifeline offered to people with bad credit. If something happens and you cannot make a scheduled payment, you’re not going to be able to loan against the loan or get some breathing room. You’ll be in for it and your name will be mud for not repaying here.
Some lenders, depending on their practices, will require you to sign over rights to an upcoming paycheck, tax return, piece of property, etc, that they will then seize if and when payment cannot be made. Yes, some payday lenders are unsavory and secretive.
No matter what you choose to do, it’s vitally important that you, as the borrower, find out the crucial information about each lender you’re thinking of conducting business with. You do not want to be caught up by any between-the-lines, hidden rhetoric, and you certainly do not want to be on the hook for an outrageous sum of money.
May 24th, 2011 at 7:45 am
Payday loans are structured in such a way that you can easily be trapped into paying fees for a very long time. You will most likely end up paying three, four, or even ten times the amount you originally borrowed, so it’s better to stay away!