Everything You Need To Know About Payday Loans | Money In Minutes

1. EVERYTHING YOU NEED TO KNOW ABOUT PAYDAY LOANS What are Payday Loans? A Payday Loan is a type of short-term loan which is provided to the borrower as soon as his/her paycheck arrives. It is basically an unsecured loan that is given by the lender after offering high-interest credit after acknowledging an individual’s income. When it comes to payday loans, it is usually advised to check for safer personal loans alternatives as these payday loans are a mere trap for the consumer as it not only demands very high interest but also charges hidden fees which the borrower may not be aware of. Sometimes these loans are also termed predatory loans as the individual gets trapped in the debt cycle. However, some people opt for payday loan facilities and make their best utilization. These loans are easy to access and have minimum requirements as compared to other types of loans. Payday loans are also referred to as same-day loans because of their fast and convenient services. Since internet banking has taken a step ahead in recent times, applying for instant payday loans through the web makes the loan accessible in a few minutes. How does a payday loan work? When an individual gets a payday loan, it can be used as a paycheck or as security against the amount the individual borrows. When someone applies for a payday loan, the credit score is completely ignored, because the lender has the authority to take its payment from the bank account after the person gets the next paycheck. This is how payday lenders minimize their risk. When the bank approves a payday loan, they give the lender a postdated check that can be deposited the next payday. If the loan is taken online, then it is the responsibility of the company to take the funds from the customer’s bank account once they have received the salary or on a pre-decided date. Are payday loans safe? Payday loans are short-term loans that generally offer high interest rates. Though these loans are often termed as ‘quick fix' they may be creating a financial sink-hole for people who are already experiencing financial difficulties. These loans are not meant for people who have financial instability and who might not be able to repay the amount with added interest. It is advised that people should only take a payday loan to address an immediate emergency expenditure. Payday loans should not be used as a solution to ongoing debts or recurring bills. What to do at the time of repayment if the cash is inadequate?

2. At the time of repayment, the customer might not be able to get a traditional source of funds to meet the cash advance loans. However, there are some ways of stretching the finances to the next payday which might work better instead of a payday loan. The customer can either use a credit card (which is not maxed out) to repay the amount or apply for a personal loan online that can be accessed with the customer’s present credit score. In general, the customer can also ask for a temporary loan from friends and family members or can also sell some stuff to generate income quickly. What are the Pros and Cons of having a payday loan? Just like all other types of loans, a payday loan also has some positive and negative impacts. Pros: ● ● ● ● ● Payday loans are easy to access. They have minimum requirements as compared to other loans It is an unsecured loan. (No collateral security required) It does not need to check the customer’s credit score. A payday loan provides loans to low-income minority communities. Cons: ● ● ● ● ● Payday loans are very expensive. They offer high-interest rates. It traps the customer in a debt cycle. Payday lenders can sue customers for the money they owe. They do not help in building good credit. Conclusion This is true that when an individual is pinched for cash, it is always tempting to fill out a five-minute application form to get the desired amount needed through a payday loan. But the quickest way isn’t always the best or the safest way. This can create unfortunate circumstances for customers who could end up paying for that single “payday” loan for the years to come. So before visiting the closest cash advance store, be sure to take enough time to calculate your expenses, budget, and needs and look for better alternative options. Original Source: https://blog.moneyinminutes.in/everything-you-need-to-know-about-payday-loans/