While advocates of payday loans say they offer financial assistance to people with poor or no credit score, critics believe this type of loan trap people in a lengthy debt cycle. What should you believe in? Here is a guide that will help you figure things out for yourself. In this post, we will examine some of the pros and cons of a payday loan. You are free to make your own decision based on how you view payday loans. Read on and find out more.
Advantages of Payday Loans
To start off, we are going to look at payday loan advantages. You might be surprised to learn that payday loans have more to offer than most people tend to think. First and foremost, they are very easy to access. In fact, many lenders promise to deposit money into your account within 24 hours. Some are even available 24/7 and have online applications to make things easy for borrowers. One such payday lending site is the renowned www.easypayday.co.za.
Apart from the ease of access, they also have fewer requirements when compared to other loans. Most traditional financial lending institutions require you to submit your proof of income, Social Security number, and copy of your ID to mention. These are documents you do not need when borrowing payday loans. Actually, you might only need you ID card and you are good to go.
Last but not least is the fact that payday loan lenders do not check your credit score. This means you can borrow a payday loan even when having a poor credit score. Unfortunately, a payday loan is not going to help you in rebuilding your credit score. Most lenders are never going to share your payment history with credit bureaus.
Disadvantages of Payday Loans
As is the case with any other type of loan, there are cons that come with payday loans. However, payday loan disadvantages can never outweigh short-term loan advantages. One popular disadvantage of payday loans is the high interest rates. You are therefore going to pay more than you had actually anticipated. Fortunately, the interest rates vary from one payday lender to another. It is therefore important to compare the interest rates before settling on a lender.
Secondly, it is quite easy for a borrower to get trapped in a debt cycle. Every time you rollover your payday loan, additional fees are imposed by the lender. This in turn increases your out of pocket costs after borrowing the loan. To avoid finding yourself in this situation, it would be better to stick with the repayment plan.
Whether you borrow a payday loan or not it is entirely up to you. Make sure you read through short-term loan disadvantages and advantages before making a decision. Remember, you do not want to make your life a living hell simply because you applied for a payday loan. Know what you need and you will be able to live a better life.