Pros and Cons of Payday Loans
Advocates of payday loans say that they grant loan access to people with or without credit, while critics argue that short-term loans unfairly target minority populations and can trap people into lengthy debt cycles. So what is the truth? In this post, you will get detailed information about how payday loans work, how different they are from others, and some of their pros and cons.
A payday loan is a short-term loan with a 2 to 4 weeks repayment plan. You can also pay a lump sum on your next payday. In theory, that is how it works. Other names used for payday loans include cash advance, pikavippi, short-term loans, quick loans, bad credit loans, and fast cash. These loans target persons with no or poor credit or minimal financial literacy who need access to money immediately. However, if you do not have credit or have bad credit, do you have other options when it comes to fast cash? These are some pros and cons of payday loans.
Easy to Access
The main advantage of a payday loan is that it is easy to access. Usually, many cash advance lenders will promise to help you access the money within 24 hours and provide you with an immediate lending decision. In fact, some are available 24/7 and allow online applications. Unlike traditional bank loans that take time to apply, these loan applications take about five minutes.
Usually, traditional lenders such as banks require your photo ID, proof of income, credit check, and social security number. Also, they will research to determine whether you have the ability to repay the loan. Unlike traditional personal loans, payday loans have fewer requirements for approval. Ideally, you need to be above 18 years of age and have a government-issued document. Although they have fewer requirements and make it convenient for you to get quick cash, remember that additional requirements from traditional lenders were put in place to protect you.
No Credit Check
Usually, you will need to have excellent credit to be approved for a loan by a bank. Fortunately, payday loans do not need a credit history. Since they do not impact your credit, it means even late repayment may not affect your credit rating. Except in rare cases, the payday loans cannot help build the credit you want to qualify for high financial products.