More and more people nowadays look for payday loans to help them out in a financial emergency. These loans are available online, and money is sent to your account almost instantly. Plus, the loans are unsecured and don’t require credit checks. This makes them really interesting financial constructions.
Another thing that attracts people to payday loans is that they only offer small amounts. The less they want to borrow, the more likely they are to be approved. But once they have been approved, they can increase the amounts quite regularly.
Who Is a Payday Loan for?
Payday loans are designed for people with bad credit. However, they can also be accessed by those who don’t have financial difficulties. Their greatest benefit is the fact that they are paid out almost instantly. All you need to prove is that you are over 18 (21 in some states), in employment and a legal resident of this country.
How Do I Apply?
The vast majority of direct lender payday loans can be found online. This is for two reason:
- Payday loans have been made illegal in a number of states, so they must operate online.
- Applying online saves time, which means you can get it paid out quicker.
How Do I Pay it Back?
When you agree to the payday loan’s terms and conditions, you will also agree for the full amount (or any other arrangement that is offered to you) to be taken out of your account automatically. This is generally on your next payday. However, since many people apply for these loans just before their next payday, some lenders now allow it to be rolled over automatically to the one after that.
Can I Pay Back Later?
Most payday lenders allow you to ‘roll over’ your loan. This means that, at the pre-agreed payment day, you will have to pay only the interest on your loan. On your next payday, you will have to pay a subsequent month’s interest, plus the loan principle. However, it is not recommended to do this. Interest rates on payday loans are incredibly high, which means you will end up paying back crippling amounts of money if you keep rolling it over.
Pros of Payday Loans
There are a number of clear advantages:
- They are quick.
- They are simple.
- They are available for people with bad credit.
- You can use them anyway you like.
- There are no fees or upfront costs to deal with.
Cons of Payday Loans
There are some significant drawbacks as well, including:
- They are expensive.
- It is very easy to fall into a spiral of debt with these loans.
- The industry is quite unregulated, which means it is quite risky.
So should you apply for a payday loan or not? Only you can decide that. If you are responsible with your money, however, you should be able to apply for one of these loans and experience only the benefits. It is about being money-smart.