Advantages and Disadvantages of Payday Loans

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 personal loan singapore licensed money 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.

4 Questions You Need to Ask When Getting a Payday Loan

4 Questions You Need to Ask When Getting a Payday Loan

You have your salary used up for paying out all the bills and expenses that are budgeted to be paid for the month. Unfortunately, there is a health emergency that has occurred that you have encountered. Getting a payday loan can often help you bridge the gap between income and expenses. These are ways you can use to help you get by.

Payday loans are easy to get loans that have simple processing. Often, these loans can be approved and released within the day. Getting a payday loan may sometimes be the best solution, especially for expenditures that involved time constraint. But before you do get a personal loan, here are a few questions you can ask to make sure you are making the right decisions.

  1. Is payday loan the only thing I can resort to?

We often find ways on how to manage our income shortage and I discourage getting a payday loan unless it’s the last option you have. Try borrowing from friends or family first or trying to find an alternative loan. Borrowing from family and friends can often get you off the hook of having to pay for interest.

  1. How much do I pay back?

Understanding how much the total cost of your loan is will help you get motivated to pay it back. Soon as you find the amount you need to pay compared to the amount you received, it is something that will encourage you to work it off and pay your loans.

  1. How much do I need?

You will need to understand how much you need. If you can compute for the exact figure, get the exact figure and make a loan amount for that figure. Understanding how much you need will help you minimize any additional cost. If you borrow too much, you will end up paying for the interest on the excess amount.

  1. How much can I borrow?

Knowing how much you can borrow will give you an idea of the value your current credit has. Having a very low loan amount only tells you that you need to reevaluate your credit worthiness.