Pros and Cons of PayDay Loans

Pros and Cons of PayDay Loans

• 2015-06-04
• 1354 Views

There are many reasons why payday loans are becoming more famous these days. And the most common one is the immediate need for cash. It is sad to note that many of these borrowers were compelled to make the loan because they have no other sources to turn to. And worse is that they are expecting to use their paycheck to pay back the money that they owe despite the fact that their income is not even enough to sustain their needs. Hence, they will end up borrowing another amount that will help them live by.

But same day loans can be beneficial in some circumstances. And not availing such offer may cause you to lose more finances. One example for this is funding a checking account to avoid some bouncing checks. When you will have the money that you need at all at once, you will save your face from those people whom you issued your check and you will be able to maintain your good bank records. 

This type of loan is beneficial to those who do not own a credit card as well. Some people try to avoid getting into debt by opting not to apply for a credit card at all. However, when faced in a circumstance wherein they will be in need for instant cash, they will resort to a same payday loan and agree for a 2 weeks or 1 month payment term. For these people, going into debt for several days is much better than having it for months or years. The fact that this loan allows you to get the money that you need at a time when you need it most gives the borrowers a temporary relief from their financial burden. This can be at times when somebody gets sick, when there is immediate need for a car repair or other unexpected expenditures.

However, loans such as these have their flaws as well. And sometimes, these advantages outweigh their benefits. Though the rates of their interests may vary from one state to another, these may reach to as much as 200%. Hence, it will be such a pain on the part of the borrowers to pay back this amount. And when the payday comes, the lender turns out getting more cash from the borrower's monthly pay. 

On the other hand, if the lender requires you to issue a post dated check for your loan payment and it turned out that your account has insufficient funding, you will be paying another penalty to the bank. And since you have not complied with the payment terms, your credit provider may impose additional penalty to your loan as well. This simply means another expense on your part. Worse is when you will end up being scammed and your bank account will be divulged to people with malicious intents. This will give them the access to your confidential information.

So, if you are planning to apply for a loan, make sure that this will give you more of the advantage. Though it may be nice to free yourself from a financial burden for a day, this is not worth it if it also means becoming captive into so much debt for a very long time.