Instant payday loans online can quickly help out anyone in need of fast money, but like many other types of loans, they do have some drawbacks. In general, borrowers are encouraged to research the loans they are considering before taking on the debt. This is why it is a good idea to learn the pros and cons of payday loans before you decide whether this financial resource is right for you.
Instant Payday Loans Online = Fast Money
The most obvious benefit of getting instant payday loans online is that the money is deposited into your account almost immediately. This means you can pay any bills that need to be paid the day after you apply for the loan. In many cases, this will save you from having to pay penalty fees and interest due on bills that are paid late.
The payday loan process is so fast because it is so simple. In fact, depending on the specific loan you get, there is no faxing or mailing involved whatsoever in the process. As long as you can show you have a steady income from a job you have been at for a least 90 days, you can usually qualify. You also have to prove you are at least 18 years old and have a checking account in your name, but these details usually only take minutes to provide.
You Don’t Need Good Credit or a Reason for the Money
If you have bad credit or even no credit at all it doesn’t matter, because you can still get a payday loan, seeing as no credit score is required for one. This is in contrast to what you could hope for if you try borrowing money from a traditional bank — with them, you would end up either without a loan or, in the “best-case scenario,” a loan with extraordinarily high interest rates. And this option is not just for those with less-than-stellar credit; individuals with good credit often do not want to allow lenders to pull their credit report to get their score, so the payday loan route may suit these borrowers as well.
Another advantage of payday loans over bank loans is that, with the former, you do not have to provide a reason for the loan. Whether you need it to pay off an emergency bill or just want some extra money before payday, you can likely qualify.
Not Enough Money or Time
One drawback to payday loans is that they usually do not come in amounts higher than $1,500. This means if you need more than that amount today, it may be tough to get it. You might even have a hard time getting $1,500 if your income is low. Most lenders only offer the amount they believe you can pay back within two weeks, so you are not likely to get a lot if your income is not high enough.
And that’s another drawback. You have to pay back the money within two weeks, so it is not a long-term solution. If you lose your job and have no income, there is no way to get a payday loan since you no longer have a payday, so you will have to check out other options.
Payday Loan Fees
Another commonly known disadvantage of payday loans is the fees that come with them. Virtually every payday loan adds interest and possibly other fees. You need to make sure the loan you get is worth the extra you will pay. That extra amount is why it is not advisable to borrow a payday loan unless you really need the money now. Many states do have a cap on the amount lenders can charge, so find out what that amount is in your state before you borrow money. If your state has no restrictions, the interest could end up being nearly half the total of the loan; therefore, it behooves you to compare fees and interest rates before you borrow.
However, many people find it difficult to compare fees and rates when lenders often use unfamiliar terms that only financial experts know. So even if you do some research on the fees before borrowing money, you may find it hard to understand the amount you will be paying, which may lead to you paying more than you might expect — and can afford. This is why it is essential to make sure you understand the terms before agreeing to take on the payday loan. Otherwise, you could end up being in for an unwelcome surprise when the time to repay your instant payday loans online rolls around.
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