Are Payday loans best suited for us? We all must have encountered this question countless times in our life. As years pass, the question keeps us haunting day and night.
In today’s “instant” society where everything is equipped towards here or now. Everyone need funds at every stage of their life because of the desire to purchase their favourite stuff, to cover some important expense or to stand against any financial emergency, as you can’t predict when an emergency will occur. However, in such situation, people become incapable to cover emergencies due to shortage of availability of funds to them.
Loans are provided to people for such critical circumstances which may occur at any time. There are many types of loan like a student loan, personal loan, payday loan, home loan, etc. for each kind of need and requirement. Loans prove to serve you for the moments when you do not want to borrow cash from your relatives or friends.
This article delves into payday loans with a focus to make you understand and usher you to choose the one beneficial for you.
This article will discuss:
- Payday loans- meaning, key points and essence
- Who can apply for a Payday loan
- Benefits and Drawbacks of a Payday loan
It is the universal truth that the wallets get empty much before the advent of the next payday and to keep on moving, people require funds. For such instances, a payday loan or cash advance loan can be a tempting and a quick favourable loan option. A Payday loan is classified as a short-term financial loan that is repaid on the next payday or salary day. This loan is structured to help you sort various financial obligations that you generally face until the next payday. These type of loans enable you to cater for unexpected emergencies and financial requirement. Holding a part in the section of unsecured loans, the borrower does not have to put up any collateral to acquire the loan. Several states have even set a limit on payday loan, which generally has a range of 100 pounds to 500 pounds with averagerepayment duration of 22 days. These loans if used efficiently can also help you get your finances back on track and in turn, sort your financial life cycle.
Payday loan soft credit check aids the bad credit individuals with a chance to opt for a loan without much consideration about their credit situation as the soft credit check done by loan brokers do not hamper or affect the credit score of the people. A soft credit check doesn’t impact your credit report.
Key points about Payday loans
- Single lump sum repayment within a short time.
- Loan amount ranging from 100 pounds to 500 pounds.
- High interest rate on loan amount.
- Beneficial to cater temporary financial distress.
- Solution for short-term needs and requirements.
Who can apply for a Payday Loan
- Applicant should be 18 years or older.
- Applicant must be a UK citizen or legal resident.
- Applicant must have formal
- Applicant should have a valid and functional bank account.
Benefits and Drawbacks of a Payday loan
- Effective for bad credits: Payday loans are generally opted by people who are working or are employed. To assess the loan eligibility, a soft credit check is performed by brokers that do not hamper credit score. And please note that a credit score is not the only deciding factor for loan approval.
- Viable solution to short-term problems: If a payday loan is used effectively, it supports as a viable solution to solve your short-term financial obstacles that impedes the regular life.
- Application and formalities: The application process of a Payday loan is simple and straightforward and doesn’t require much paperwork and tons of documents, also with the online application it takes less time than traditional format which makes it easy to obtain the loan.
- High-interest rates: The interest rates of a payday loan are high and add more amount to the repayments than one usually think before acquiring the loan.
- Costly and Expensive: The loan amount of a payday loan is costly because of its short-term nature, which turns to lead you towards large financial problems.
- May affect credit score: The non-repayment and late payments of a payday loan affect your credit score and increase debt problems on a person that leads to borrowing more debts to repay other loans.
Before taking out a payday loan, always find alternative options or if the loan is suitable to cover your need and requirement. If you have tried finding every possible way and still choose a payday loan, then you must always shop for lender or broker that offers you the lowest interest, as it will aid to save money even after spending. But in the end, the choice always relies in your hands to count the loan as an advantage or as catastrophe.