Can A Payday Loan Help You?

A couple are assessing their financial situation by checking their accounts and bills
Advantages And Disadvantages Of Payday Loans
Part 1 USA Payday Loans And Their Regulation
Part 2 Payday Lenders And Common Practices
Part 3 Can A Payday Loan Help You?
Part 4 Considerations About Short Term Payday Loans

Before you apply for a payday loan it is important to read as much as possible about all the benefits and drawbacks of the loan. Even if you are feeling that your financial position cannot be worse, it could be if you do not take into consideration the consequences of borrowing at a high rate of interest. In this article we examine:

  • Payday loan benefits and drawbacks
  • How your credit score plays into payday lending
  • Understanding the risks of short term lending
  • The popularity of online lenders

What are the real benefits of payday loans?

One of the most highly rated benefits of payday loans is the swift access to cash. If you are experiencing a financial emergency and are unable to get to a storefront lender you can apply online. As long as you have the necessary proof of ID, proof of income and a current checking account, the funds can be in the account within a matter of hours. Most payday lenders do not ask to look at credit reports so if your credit rating is low or you don’t yet have one, this will not prevent you from getting a loan.

A payday loan can sometimes be the cheapest option when funds are low

Overdraft fees or charges for a bounced check can be expensive and if your phone is cut off for non payment you may have to pay a reconnection charge. Even more dangerous is the possibility of eviction from your home and using a payday loan to cover a shortfall in the rent can be useful as long as it is only done once. Charges for a late payment to a credit card can also be very expensive and as long as you pay back the loan on the right date, a payday loan can sometimes work out to be the least worst option.

Keep a credit score intact

Meeting all your financial obligations can sometimes be hard and if you are unable to make a payment for a card account or existing loan it can damage your credit rating. So, a payday loan can help to protect your credit score from being damaged. Lenders are not allowed to release your personal information to other institutions unless you have given them permission so the transaction is confidential.

Interest rates on payday loans are always much higher than those charged by banks and this is because the term of the loan is short.

Flexibility is another benefit of a payday loan and your borrowing limit is dictated by state regulations and how much you earn. Online lenders are also available at more convenient hours than stores. Now let’s look at some of the drawbacks of taking out a payday loan.

The drawbacks of a payday loan

It can be the case that someone takes out a payday loan without being fully aware of what they are signing up for. Then, when the repayment date arrives they are not prepared or have not made plans to cover the payment that is due.

It is important to remember that a payday loan is only for a short duration. So, if you need funds to see you through a longer term financial problem this product is not the answer.
Any non payment will attract a range of fees and charges as well as hiking up the interest due. You could be charged for a bounced payment and then the principle sum attracts even more interest as the amount you now owe is greater.

A man is shown considering the benefits of payday loans by writing them down on paper

Interest rates on payday loans are always much higher than those charged by banks and this is because the term of the loan is short (usually between 14 and 30 days). It is very easy to get into a situation where you are getting rollover loans (or renewals). Once this happens it is even more difficult to get out of the spiral of debt.

In fact, this is one of the main drawbacks to taking out a payday loan. Once you get into serious debt you are putting your home and family at risk. The most important point to remember is that a payday loan is not a long term solution to any ongoing financial problems.

Weighing Up The Risks of payday lending

After looking at all the benefits and drawbacks of taking out a payday loan, you will be able to make a better and more informed decision. If you make the decision that the risks are too great, there are some alternatives and these should be examined to see if there is another way to solve your financial problems.

The popularity of online lenders

Rising in popularity, online lenders are the latest option if you want to get a payday loan. The Internet has become such a huge part of daily life and it is worthwhile looking at how you can get a payday loan from this source.

Any non payment of a payday loan will attract a range of fees and charges

The convenience of using an online lender is quite clear. You can browse at your leisure, find the best option and there is no embarrassing trip to the town store where everyone knows you.
Using the Internet you can find an ethical lender. Just click on the terms and conditions on offer and find the best rates. Most of the well known lenders have an online presence so if you are searching for a company with which you have previously done business it is easy to find them.

Online lenders are all vying for business and most will publish reviews from previous customers so you can take a look and this will help you to assess whether the company is right for your individual needs.

Advantages And Disadvantages Of Payday Loans
Part 1 USA Payday Loans And Their Regulation
Part 2 Payday Lenders And Common Practices
Part 3 Can A Payday Loan Help You?
Part 4 Considerations About Short Term Payday Loans

About the author

Mark Larsen

Mark Larsen has worked in the finance industry for over 20 years. Over the course of his career, Mark has amassed experience in personal finance and especially short-term lending. He shares his valuable insights on onlinecreditusa.com