Advantages and Disadvantages of Payday Loans

When you decide that you need an immediate funding for bills and short term expenses, payday loans are one of the most sought for loans to make ends meet. Payday loans are initially intended to address emergency situations where the income falls short of expenses. To understand more about payday loans, here are a few advantages and disadvantages you can review.

Advantages:

  1. Easy to obtain loans. Payday loans are easy to obtain. With minimal requirements you can get a payday loan. All you need is a secure employment and a consistent source of income. You can fill up and complete an application form and processing should be easy.
  2. Quick release of proceeds. Being an easy loan to apply for, it also provides a the borrower the funds within 24 hours from time of application. No other loan can provide approval and processing this quick.
  3. Provides loan without credit score references. This is one loan where your credit score does not matter. As long as you have the capacity to pay and employment, then you have a good chance you get approved.

Disadvantages:

  1. Payday loans can be expensive when rolled over. Payday loans are meant to be paid immediately. If you roll over your credit occasionally, it will offer you a way to a spiraling debt. This is one reason why payday loans should be settled immediately.
  2. Fees for payday loans are unclear. Although the government provides regulations on how a payday lender should operate, payday loans offer unclear interest rates among each other. There is no standard rate to be followed, only a cap. In this case, lenders can charge so much that it can abuse the cap provided by the government.
  3. Fees are high. If you decide to roll over your credit, most probably you will be paying for high fees. In this case, it can cause another effect of falling short next month.

Payday loans have proven to be tricky loans to settle but they can also be effective ways to raise funding for emergencies. Manage your payday loans well and there shouldn’t be a problem of getting into debt.