Payday loans are often touted as a quick solution for a bad financial situation, allowing you to bridge the space between not having enough money and your next wage or salary coming in. The basic idea is that you could borrow a modest amount of a few hundred dollars for a while of a couple of weeks, and repay the debt the next time you get paid.
This sort of service can indeed be very useful if you’ve exhaust your cash for living expenses, or maybe you’re confronted with an unexpected bill or expense that you simply can’t cover when you need to, but are pay day loans always the best choice they’re presented as?
First, if you decide a payday loan isn’t ideal for you, we’ll look into the undeniable advantages of these loans, before looking at the disadvantages, and possible alternatives you may be able to use.
AnyDayLending.com The lending criteria for payday loans are really generous indeed, and almost any person who’s has and employed a suitable banking account will likely be approved. This means that even people with terrible credit ratings should be able to have a payday loan, despite being rejected for nearly almost every other form of finance.
They are also simple to arrange, and you will often get the money in your account in a matter of days. Some lenders can even arrange an overnight transfer of the loan straight into your account the very next day, which is obviously very beneficial when you need cash in a hurry.
Finally, if you find you need to utilize the facility if funds are again short later on, once you’ve been approved for your first loan, it’s usually a very simple matter to ‘refresh’ your loan again.
There are actually, however, two major downsides to payday loans you rarely see mentioned inside the advertisements and web sites promoting them. Firstly, they’re very expensive compared to other forms of credit. A fee of 20% of the amount you borrow – which is about standard – will continue to work out to be an eye-wateringly high APR, because the term of the loan is so short.
The second problem is closely related: because they’re so expensive, you can easily be left lacking money the subsequent month once you’ve cleared the loan and paid the fee. In this scenario, it’s just too simple to refresh your loan again to pay the shortfall, resulting in more fees, and a never ending cycle of borrowing.
So, should you decide that a payday loan isn’t a good choice for you, what alternatives do you have? If you have one, the first one is making use of a charge card. While credit cards are usually also pretty expensive forms of finance, they do permit you to spread the debt over a variety of months as an alternative to needing to be repaid right away along with a fee.
Many banking accounts now offer an overdraft facility, which could also be used to cover a shorter term deficiency of money. The interest rate upon an agreed overdraft is likely to be better than that of credit cards, but your bank may not approve your application. Stay away from going ahead and overdrawing without your bank’s agreement, as the charges they will levy in this case will be really expensive.
And you have hardly any other way of getting hold of money for example borrowing off family, then the payday loan might be the best option, if neither of the options is available to you. Just ensure that you make use of it properly, and heed the warning sign it’s supplying you with about the long term state of the finances.