Pros And Cons Of Payday Loans

Posted on: 30 March 2017

When you find yourself in need of cash quickly, payday loans are one source that you might turn to. But are they the right choice for you? These pros and cons can help you make that decision.

Payday Loans Are Quick

One of the biggest pros with payday loans is their quick process. You can often apply online. You may be able to hear back from lenders and get funds on the same day. That makes the whole process less stressful when you need money in an emergency situation.

Payday Loans Apply to Most People

Payday loans also are available to many people even if you don't qualify for a bank loan. Even when you think your credit is bad, you might be pleasantly surprised about getting approved for a payday loan.

No Collateral Is Needed

Some personal loans with banks require you to put your car or home on the line as collateral. Instead, with a payday loan, the lender often doesn't require those types of commitments.

Repeat Customers Get Deals

If you do need to rely on payday loans more than once, it may be comforting to know that your credit limits with a payday lender may go up if you successfully repay a first-time payday loan. It's almost like an alternate way of building a credit with a lender when your credit score isn't great.

Payday Loans Can Have Higher Interest Rates

One thing to be careful about is checking the interest rates on your payday loan. Make sure they are within the range you are willing to pay for an emergency loan.

Payday Loans Have Quick Repayment Schedules

Another thing that might be a negative for some people is that payday loans require a quick repayment. You won't have years to pay back these loans. Therefore, they are really best for someone who is experiencing a financial emergency but will be able to repay the loan quickly, once they get another deposit in their bank account. That's why they are called payday loans; they are geared towards holding someone over until the next payday.

If that's not you, then considering alternate lenders might be a better choice for you; those lenders can mimic the more drawn-out repayment schedule of a bank loan. Still, the important thing to know is that there are several different strategies for getting cash in a pinch, even if you don't have the credit to draw on. To find out more, speak with a business like Advance U Cash.