People often have the need for short term loans when the financial times are difficult. This is particularly true of people who are less advantaged. These people often have the need for some fast money in the short term when they have a financial problem and they are between paydays. There are numerous situations such as a medical emergency that requires money and the problem won't wait until their next payday. One of the best solutions to these problems is a payday loan.
A payday loan is a short term loan that is intended to be repaid by the consumer's next payday. Therefore, payday loans are temporary cash advances that are required to be repaid by the next disbursement of a consumer's salary.
Obviously, the payday loan lender determines the amount of money to be lent. The payday loan lender then determines the consumer's trustworthiness and the ability of the consumer to repay the loan. The usual amount of a payday loan is somewhere between $200 and $2500 and the consumer is supposed to repay the loan no later than thirty calendar days.
The Advantages of a Payday Loan:
The consumer can benefit from many advantages of a payday loan. The money from the payday loan is usually directly deposited to the consumer's checking or savings account. The consumer's poor credit or history of bad credit isn't taken into account and even consumers who have low credit scores will have their loan approved. The fact that the money can be used by the consumer for any purpose that they see fit such as the repair of an automobile, an unusually high utility bill, or unexpected medical bill is another advantage to consumers. There are also no hidden expenses associated with a payday loan and another advantage of this type of loan is that it is transparent. This way the consumer understands exactly what they have to pay for the loan. Another advantage is that it is easy for a consumer to obtain a payday loan. There is no paperwork required other than the consumer's pledge to repay the loan. Therefore, the advantages of a payday loan are that they will help the consumer pay for unexpected expenses with a loan that is transparent, fast, and easy to obtain.
The Disadvantages of a Payday Loan
There are some disadvantages to a payday loan, although the advantages definitely many. For instance, in comparison to a conventional loan, a payday loan has a relatively expensive interest rate. If the consumer doesn't repay the payday loan on time, their credit score may be damaged. In addition, as opposed to a conventional loan, the credit that is granted is usually for relatively small amount of money. These are the two main disadvantages of a payday loan.
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