PROS AND CONS OF PAYDAY LOANS
Payday loans are essentially short term cash advances on a borrower’s actual paycheck. The grace period for payday loans is commonly two weeks, or until the borrower’s next pay day. However, this time period can often be extended with an added interest charge, and on some occasions, extra late fees are added. The actual terms of payday loans differ depending on the individual lending institution and duration of the loan. Payday loans are a great option for people who need quick cash to pay for sudden, emergency needs such as unexpected medical costs, unexpected travel expenditure or even common utility bills.
The pros of payday loans are many. Several lending institutions do not call for credit check of borrowers as the loan to be extended is of a minimal amount. The information requisite is the borrowers current employment, bank account, and debit card. Payday loans are accessible by every person who is over 18 years of age and is engaged in full time employment. Another benefit of payday loans is that borrowers can avail of affordable loans in case of emergencies. The loan amount is automatically deposited in the borrower’s bank account normally within 24 hours of approval. The application procedure to be followed when applying for payday loans is easy and convenient. It is even possible for persons with bad credit ratings to avail of payday loans.
One disadvantage of payday loans is that the lending institutions charge high rates of interest. This is because lending institutions are undertaking risk-laden ventures by not conducting any credit checks of borrowers and they also extend loans to individuals with a bad or poor credit history. Another major disadvantage of payday loans is that borrowers become dependent on such loans, as they are easily available. It has been noted that payday loan candidates are repetitive applicants. Payday loan borrowers usually have a past record of several loans. This is mainly because other types of loans are not available as easily as payday loans.