Payday loans seem to be getting more and more popular as time passes and middle/low income class citizens find themselves dry of cash due to the economic crisis rocking the globe. I’m sure you found yourself short on money as well, and needed an emergency loan just to go through the month and pay all of the bills. Once it was more viable to just borrow money from friends or family and just pay them back, but today everybody’s hurting for money so this option may not really be an option anymore. Bigger long-term debts are also not a solution as you need immediate access to low amounts of money, not a huge amount of money you have to pay back over long period of time. These are factors leading to popularity of payday loans, but they do not explain the good and the bad sides to these types of loans, and they do have both sides. If you’re unfamiliar with the subject, here are some payday loan facts for you.
Quick and easy loans – Getting a payday loan approved is probably the quickest financial process you might imagine. Even getting a credit card out can take up to a week or two while your credit ratings and scores are being examined, but with payday loans things are much simpler. All you need is proof of employment and bank account number where you get your salary paid, plus some basic form of ID and you’re good to go. The process of getting a payday loan approved after the first time is so paperwork free that you can get it arranged online with most good companies.
No credit rating influence – If you’re in a process of managing your credit rating or you’re one loan away from having it turn bad, than a loan in the form of a payday loan is the best way for you to avoid leaving a negative mark on it. These loans go directly against your salary and are not counted when your credit ratings are being calculated.
Small loans – Payday loans are meant to cover your finances for a bill or two you just can’t afford paying at the moment, and nothing else. Several hundred up to a thousand dollars, that’s the standard amount most of the payday loan companies work with, so these loans are not good if you need bigger sums of money.
High interest rates – This is how lending companies make sure their risk pays off, the loans they give are quick and easily accessible, but even the starting interest rates are way above what a regular banking loan has to offer. Missing a payment or two sends the interest rates into the stratosphere – so make sure you can pay the loan back in time before you get saddled with it.
Availability – As counterintuitive as it may sound, having these loans so easy to pick up is not a good thing as many people without habits of being financially responsible have gotten too addicted to them, leading to poorer financial state than they begun with when they picked up their first payday loan. Some people have never learned to manage their money well, and the lure of quick cash in the form of payday loan got them so deep in debt that they’re not likely to get rid of it in quite some time.