The Pros and Cons of Payday Advance Services
Topics in regards to the pros and cons of payday advance services are quite popular nowadays where economic crisis is prevalent. Before going on to the main topic of this article, payday advance services or simply payday loans are one of the fastest and easiest types of loan applications as of today. Thus, if you need cash due for emergency purposes, payday advance establishments are one option you can opt for. However, be reminded that there are some risks involved. Hence, one should also know the different disadvantages and advantages of these types of loan.
Defining payday loans
Although it is not legal in all states, payday loan is booming trend. To describe briefly, payday loans are short-term credit. As its name implies, debts should be paid during their next pay check or salary. Thus, you have to be employed to be qualified. It terms of the amount of cash, one can only loan small quantities. Typically, they can only lend you a maximum of $1,500 while some goes as high as $3,000.
As for the application process, most payday advance services can provide you cash within 24 hours or earlier. Online applications are the most commonly used process. But, you can also personally apply in any payday advance establishments if preferred. With that being said, what are the pros and cons of payday advance services?
Advantages of using payday loans
As mentioned earlier, payday loans are one of the easiest and fastest loans you can opt for. Aside from that, loans are forwarded to your bank accounts the following business day. Hence, one major advantage of it is that the loan is easy to acquire which is quite handy during financial emergencies.
Another advantage of using payday loans is that they dont ask for a lot of documents and other types of requirements. Unlike conventional loans, having a bad credit score will not affect your chances of payday loan approval. Aside from that, there are no collaterals involved.
Lastly, applying for payday loans is very convenient. As stated above, online applications are available while approval is also done online. Through this, you dont have to trouble yourself going to their establishments.
Disadvantages of using payday loans
The major disadvantage of payday loans is high interest. One analysis done in payday loans showed that it can reach as high as 500% interest in a year if left unpaid. This typically results to the vicious loan cycle. In this cycle, loans are repaid by another loan leading to continuous debt problems.
Since payday loans are illegal in some states, some lenders have illegal and unethical ways of collecting debts. This is another disadvantage of using payday loans especially if you cant pay your debts on time. One classic example is when lenders automatically take some money out of your bank account without prior notice.
Unlike conventional loans that you are protected by law, some payday advance establishments are illegally established. Hence, you may encounter terms and conditions that favor lenders instead of borrowers.
Payday loans maybe convenient means of financial support especially during emergency situations. However, keep in mind that you have to pay it. Furthermore, you have to the pros and cons of payday advance services before applying in one.