Is a payday loan really an opportunity or just a trap? Well, wrong question!
Everything in this world has both good and a bad side. In a similar manner, a payday loan also has its own pros and cons. It is because of this reason, one has to decide for himself if the idea is worth taking the risk or not.
What exactly is a payday loan? Well, a payday loan is a short-term loan that can be taken during the payday periods to finance your expenses or difficulties urgently. These loans need to be repaid once you get your monthly income and the due date is decided beforehand. Payday loans are also called cash advances and usually not more than $1500.
On one hand, the payday loans can be a good tool if you are looking to borrow a small amount of money for a short span of time. If used correctly and responsibly one can have a good experience with a payday loan.
On the other hand, it’s a fact that payday loans have been the subject of numerous controversies. A lot of people have had their finances destroyed and found themselves under huge debts. So, it is very vital for you to know both sides of the coin before you sign up for a payday loan.
Payday loan as an opportunity
- The short-term payday loans do not require for you to have a good credit score or to have access to credit cards. Any employed US citizen of eighteen years and older is eligible to get themselves a payday loan.
- Provides a good option when there is no other choice, if you find yourself in a sudden financial emergency, a payday loan can easily help you deal with it for the time being.
- You can easily apply online, no need going through the hassle of dealing with all the paperwork and standing in queues at the banks anymore. Once you submit your application online, the funds are deposited into the account in just a few hours after you get the approval.
Payday loan as a trap
- The interest on these payday loans can easily range from 300 to 900 percent. So expensive to afford!
- The large costs that are associated with these loans makes it very hard to get out of them later, and especially if you fail to pay back your loan in due time, the interest rates keep getting higher and higher.
- You can find yourself falling into a vicious cycle if you are unable to repay on time and keep extending your loans. These payday loans companies gain a large amount of profit from the consumers who fail to repay on time, and more and more fees is added to the original borrowed amount leading to high debts.
- A lot of payday lenders use misleading marketing techniques to deceive the customers and sometimes not disclose proper information and lure people to sign up for payday loans by manipulation. It is best to be careful and investigate properly about the lender you are about to choose to deal with.
So, in short, payday loans can be either an opportunity or a trap – it depends on the payday loan lenders you choose and especially your current financial situation.Read More