If you consider requesting for a loan but is still undecided about your options, or you don’t qualify for loans in traditional institutions due to too much borrowing or poor credit history, payday loans can be the best option for you. Just like any other loan type, payday loans need to be repaid on time. But this is where the comparison ends. This is on the fact that lenders who offer payday loans are not banks and as much as the loans are also regulated, there are completely different rules governing them.
Payday loans are short-term loans offered in small amounts that borrowers can request for when they are in need of money. The loans were introduced to fill the gap by offering loans that banks and other financial institutions are not in a position to offer due to their high risky nature. Payday advance loans are short term and some of them need to be repaid in as soon as two weeks. But if you request for a higher loan amount, the repayment period can last for up to 20 years. To request for a payday loan, the borrower is required to write a check with the amount they want to borrow, including the loan fees. The check is left with the lender who cashes it immediately when you are ready to repay the loan.
The borrower is expected to start repaying the loan when it is due. Failure to which it can be rolled over, extending the repayment period. Payday loans are also referred to as no credit check, which means that you do not need to have a good credit history for you to qualify for a loan. This makes the loans popular, especially for people with financial challenges that require urgent financing.
Most lenders require payday advance loan borrowers to repay the loan on their next payday. The check issued to the borrower acts as a guarantee for repaying both the loan and the interest rate incurred. The lender encashes the check when the loan repayment date is due. It is important that you do not request for a payday loan if you cannot make repayments on time. This is because you may risk paying more interest rates, making the loan very expensive.
Just like other financial tools, there is a wide range of providers who offer payday loans. It is important that you compare their rates and terms for you to find the most convenient product. To qualify for a payday loan, you should be above the age of 18 and have a consistent income. The good thing with payday loans is that you do not have to be on full-time employment for you to access the loan. Provided you receive consistent income to your bank account (even if it is in form of government benefits) you will be eligible for the loan.
Before the loan is approved, some lenders will go through your credit rating. Having poor credit does not mean that you won’t qualify for the loan. However, there will be limitation on the maximum amount you should borrow. Borrowers with poor credit are eligible for lesser amounts compared to those with good credit score. Lenders also impose strict terms and conditions on such borrowers.
Payday loans come in handy especially when you are in need of urgent funding. This is because it has a faster approval process and there are no strict terms and conditions regarding the loans. Some of the situations that may require you to request for payday lending include:
It is also important to note that payday loans are meant for short-term financing. If you need to use the money for more than a month, consider requesting for a cheaper loan option.
Even before taking out a payday advance, it is important that you weigh the pros and cons. Will the loan be beneficial to you and does it have affordable rates and convenient terms and condition? If for instance, you are requesting for a larger amount to be repaid for more than 10 years, you need to look for a lender with the least rates. Payday loans are the fastest option for borrowers in need of instant funding. Here are some of the benefits of payday loans:
Requesting for a payday loan is a convenient way for you to access quick cash. However, it is important that you use the loan for genuine purposes. Before taking out the loan, ensure that you look for the lender with convenient terms and conditions. If you take up a payday loan for the right reasons and use it in the right way, be sure that you will have a positive experience with the loan.