Easy Cash Loans – The Benefits Of Payday Loans

A couple are happy because their received a loan that they applied for online
Do You Need A Payday Loan?
Part 1 Short Term Loans In The USA
Part 2 What To Consider About Different Types Of Loans
Part 3 Easy Cash Loans – The Benefits Of Payday Loans
Part 4 How To Save Money And Manage Your Debt

Payday loans give you fast access to cash and if you are in the midst of a financial emergency and cannot last until your next paycheck, you can get the funds that you need, sometimes within a matter of a few hours. Imagine a situation where your automobile, which you need to get to work, has broken down and you simply do not have sufficient savings to cover the repairs. You know you will be able to pay for the repairs when your paycheck arrives but need the cash now and not in two weeks. In this case cash loans can be the answer to your problem. In this article we discuss:

  • The main benefits of payday loans
  • Disadvantages of payday lending
  • Alternatives to payday loans
  • Peer to peer lending

Benefits of payday loans

A low credit rating

If your credit rating is less than perfect you can still get cash loans. Lenders require proof of income so they can be sure that at the designated repayment date you will have the money to repay the loan.

Cheaper than an overdraft

Payday loans are often a cheaper option than going overdrawn at the bank. Charges for bounced checks or fees for exceeding an overdraft can be higher than the interest charged on a payday loan.

Taking out a payday loan will not have an impact on your credit rating

Borrowing money from a credit card can also be very expensive and the revolving credit of a card account means you might be tempted to only repay the minimum amount demanded at the due date.

Protect your credit rating

Taking out a payday loan will not impact on your credit rating and this is important. At some point in the future you may wish to take out a home loan and will need a good credit rating in order to qualify.

Disadvantages of payday loans

High interest rates

For very short term lending, a payday loan can be a good option. But, if your financial problems are ongoing long term events, a loan of this type is not going to sort out the mess.

Charges and fees

Charges and fees for cash loans, specifically payday loans, can be very high. In fact, much higher than those charged by traditional lenders like banks. Any extension of the debt will soon create a situation where fees can double or even triple. When this happens you can soon get to a stage where paying off the original debt becomes impossible.

A couple receive a cash loan from a lender

No payday loans for the unemployed

In order to qualify for a payday loan you must be employed so this kind of loan is not available to those who are out of work. Some lenders will offer cash loans to part time workers and those who receive benefits. But, these offers will come at a heavy price as the interest rates will be even higher than normal. In addition, you may not qualify for a payday loan unless you have a current checking account.

Restrictions on the amount available

A payday loan by definition is only going to be for a small amount. The maximum that can be borrowed would be $1,500. But, in most states there is a cap of between $300 and $500. If you need to borrow a larger sum you will need to look for a different source.

Fraudulent lenders

All payday lenders must be licensed and are regulated by the state in which they are domiciled. However, the recent increase of online lenders has posed some problems for the authorities. Some of these new lenders base themselves on reservations and this allows them to operate outside of the state regulations.

All payday lenders must be licensed and are regulated by the state in which they are domiciled.

If you are considering borrowing through an online platform you must always check that the lender is trustworthy and licensed by the state. Frauds may be perpetrated by brokers who are not direct lenders. Using one of these sites may result in your personal information being sold on to other companies.

Alternatives to payday loans

Payday cash loans can be an expensive way to borrow and it is a good idea to consider all the alternatives before you go ahead with borrowing. If you look at all the other options available you will be able to decide whether you really need a payday loan.

Credit union loans

For many people, a loan from a credit union is a good alternative way to borrow. The charges and interest rates are usually much lower and they are non profit making, trustworthy organizations that you can be sure will not rip you off. In order to join a credit union you must meet certain eligibility criteria. Many of the larger unions are set up at companies like Boeing or military services like the Navy. Smaller organizations may be found in certain city areas where some of the most vulnerable people live and work.

A credit union manager is calculating a loan before approval

In order to qualify for a credit union loan you must have some small savings with the organization, The service is more personal and many operate using volunteers who can be trusted to tell the truth. Additionally, you may be able to receive debt counseling from this kind of organization.

Peer to peer loans

Peer to peer lending is another alternative to a payday loan. The two largest P2P lenders are Lending Club and Prosper. This kind of lending does not fit into any of the usual categories of financial transactions. P2P may or may not involve making profits. The company acts as an intermediary between people who want to lend and people who need to borrow.

All transactions for P2P lending operate online and lenders are free to choose to whom they wish to offer funds. Peer to peer loans may be unsecured or secured. The online application asks for proof of identity, address, earnings, bank account details and a credit check. Unlike the credit unions, P2P lending is more likely to suit customers who want to consolidate debts or who wish to borrow funds for investment into a riskier proposition than banks would usually consider. However, it is always best to think about all the options available instead of payday loans.

Do You Need A Payday Loan?
Part 1 Short Term Loans In The USA
Part 2 What To Consider About Different Types Of Loans
Part 3 Easy Cash Loans – The Benefits Of Payday Loans
Part 4 How To Save Money And Manage Your Debt

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