Everything has a positive and a negative side when it comes to the financial sector. Payday loans are easily available to almost everyone, but they may come with major consequences.
Here are some advantages and disadvantages of payday loans
The payday application is approved instantly. Your application can be approved within minutes or latest two days depending on the terms of the lender. This is why most people prefer payday loans to bank loans. With banks loans, it may take the lenders up to three weeks to approve your loan request. This is helpful when you need emergency loans.
There are minimal requirements when it comes to payday loan services. You need to be 18 and above to be approved for this services. The general requirements needed when setting up an account through their website is; a valid ID or driver’s licence, and a bank account. The lender uses the bank account to deposit the approved loan and collect the payment with your approval.
All the processes involved in payday loans are quick and simple. The application, registration and payment are done through online payday sites. The loans are very convenient. All you need is to access a payday loan website through your phone, register with the payday company of your choice and apply for a loan. You do not need to travel for hours and stand through service lines to get apply for a loan. When the payday loan is approved, the money is sent through wire transfer or directly into your bank account where you can access it when you need it.
Paying the loan on time, or weeks before the deadline will automatically qualify you for a higher loan. Every time you make early payments, you immediately qualify for a higher loan. if you make consistent payments, you will qualify for bigger loans that can be useful for bigger emergencies.
A payday loan expires within two weeks to three months. You have to make the payments on time to avoid some major consequences. When you don’t make the payments on time, the interest rates begin to grow at a rate set by the lenders until you clear the payments.
Even though lenders do not need your credit card for any transactions, payday loans can affect your credit card report. You may find that your credit card statement is linked to your bank account which contains the payday transactions. When you make late payment, the report reflects on your bank account which then reflects on your credit card statement. Every time you make late payments your credit score drops. Too many late payments will affect your credit score and you won’t be able to receive bank loans.
Payday loans are more expensive compared to normal bank loans. When you receive a loan, the interest rates are imposed immediately. Many people avoid taking payday loans because of the interest charge.
Payday loans are good for emergencies, but if you are not careful you will end up with more loans than you can pay off. They are quick and easy to access but may pose a great threat to your credit card and monthly commitments.