If you have suddenly been faced with the overwhelming weight of unexpected expenses or financial burdens, payday loans can provide you with the quick cash you need to get back on your feet.
For the many people that live paycheck to paycheck, it can be almost impossible to set money aside for a rainy day. Meaning when life all of a sudden hits them with a crisis, such as car repairs or medical bills, they are unable to cover the expenses without seeking help from outside sources.
Payday loans are defined as short term loans that are designed to provide people with a small amount of money to cover unexpected expenses. These quick cash loans do not require a credit check, and are based on your weekly or bi-weekly paycheck.
While they are regulated on a state and federal level, the terms of payday advances can differ from one state to the next, as well as from one company to another. Before accepting a payday advance, it is important to weigh out the pros and cons, and carefully review all of the term and conditions of the loan.
Pros of instant payday loans
- Easy to find – Advance payday lenders are extremely easy to find. In addition to being located in multiple locations throughout most cities, you can also find payday lenders online.
- Easy to qualify – It is easy to qualify for payday loans. Since they are based on your pay, the lending company does not require a credit or background check. Lenders only require proof of identity and income to approve your application. Your income can easily be verified with bank statements or paycheck stubs.
- Easy to get approved – The approval process for payday advances is fairly simple. In most situations, your loan will be approved upon providing proof of income. While there is no credit check performed, lenders will make sure you have not previously defaulted on any other payday advances. Once all of this is verified, your loan should be approved.
- No restrictions – Payday lenders do not apply restrictions on the loan. You are free to spend the money on whatever you would like. This is great for someone who needs the extra money to help out with expenses during the holiday season.
- Small loan amounts – Payday lenders limit how much money you can borrow from them at a time. The loan amount is based on your income, and does not permit you to borrow more than you earn. Smaller loan amounts try to prevent borrowers from getting in over their heads and help reduce the toxic debt cycle.
Payday loans cons
- Interest rates and loan fees – Even though payday advances are governed by state and federal regulations that limit the interest rates and fees, the cost of the loan can still be extremely high. This is because lenders must charge a high interest rate in order to make a profit on the small loan amounts.
- Understanding terms and conditions – Since the terms and conditions of payday advances can vary from state to state and company to company, it is important to pay close attention to the terms and conditions, to make sure you fully understand. Some companies will bury fees within their legal jargon.
- Repaying can be difficult – If you are already having financial hardships and living paycheck to paycheck, paying back the loan can be difficult. This can lead to an endless debt cycle or cause you to default on the loan. For this reason, it is wise to only borrow money from payday lenders in absolute emergencies.
Payday loans can be helpful if you are in a financial crisis, but it is important to weigh the pros and cons before seeking the help of a payday lender.