Are payday loans bad? To weigh the pros and cons

Getting a payday loan isn’t an easy decision, but there are times in life when you might need some extra cash to get that next paycheck. Payday loans are granted in smaller amounts, ranging from a few hundred dollars to a few thousand. These are short-term loans, and repayment is usually for the next payday, or shortly thereafter. Payday loans are also called payday advances or cash advances, short term loans or quick loans. This blog will tell you that payday loans are bad: weigh the pros and cons.

The biggest question behind these short-term loans is, “Are payday loans bad?”

Are payday loans bad?

Payday loans have certain advantages, as well as some disadvantages that you should consider before getting one. They can get you the money you need, but is it bad to take out a payday loan?

Consider these things:

Accessibility

One of the main selling points of payday loans is their accessibility. You don’t need to have a lot of credit, or even a great credit score to get one. The most important thing is a stable income and a way to prove it. For this reason, many people who cannot get loans from traditional lenders choose payday loans when they have urgent expenses.

Likewise, if you’re worried that a credit check will interfere with the credit you’re working on, these loans often don’t require a credit check.

Total cost

They may be easier to get, but they also charge for ease of access. For example, most credit card interest or personal loan interest is 30-36% (depending on credit history, warranty, etc). Some even have interest as low as 4%. Payday loans are profitable because of the interest they charge, which can average up to 400%.

In some cases, paying that extra interest is worth getting the emergency funds you need. If you don’t understand the terms or how interest accrues, you may end up owing a lot of money. If you make repayments on time and know how much interest you’ll owe, this can be a manageable trade-off.

Quick funding

They provide funds when you need them most. It’s just important that you use them when appropriate. Wanting a new TV isn’t the same as having to pay a medical bill or keep the lights on. Most funds from payday loans are deposited directly into your bank account, often within a day or two of approval.

Some lenders even offer same day payday advances. If you have an emergency, you can fund it quickly. Keep in mind that you’ll still be paying interest with your repayment, so if it’s a “want” and not a “need,” a payday loan may not be the right fit. solution.

final verdict

After looking at the most important aspects of them, are they bad? Any financial decision that you don’t make for the right reasons, or without understanding it, is a bad decision.

When you understand this, you can make the choice that is right for your situation. Payday loans can help you get through tough times and emergencies. They’re not bad, but as a responsible lender, you need to make an informed and responsible choice before borrowing. In case you are interested, you can find more information here.

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