The thing about payday loans is that the more popular this kind of loans get in the U.S. there are more people advocating against it. While both sides have strong arguments on why you should or shouldn’t be using payday loans, there have been divided opinions on them state-wise. There are currently 35 states with regulated payday loans laws that allow payday lenders to work under a license, which protects the customers from unreasonably high rates or other forms of exploitation. To try and present you things objectively, we’ve listed things from both sides of the medal, stressing out the upsides and the downsides of payday loans. We hope this article to be helpful when deciding on the kind of loan to apply for.
No credit check required
Great thing about payday loans is that no lender is gonna check your credit record. This means that people who would otherwise get rejected by banks can be sure that they will be granted a loan if they go for this option. No credit check means also faster way to get cash, because the whole process gets simplified. This is a great way to get some money if you have low income or an unstable job and have trouble getting loans from other sources.
Fastest way to get cash
With payday loans, all you need is some ID, proof of previous payrolls or employment history, and you’re good to go. Many lenders offer their services online, which means you can apply for a loan at any time of day or night, 24/7, and the money will be transferred to your bank account within the maximum of 24 hours. If you’re in a rush, this is the perfect way to get a cash loan at a short notice.
Limited cash amounts
Unfortunately, there is a cash limit in the amount of money you can borrow using payday loans, and it usually goes up to the amount of your latest paycheck. This can be a big downside if you’re facing an unexpected expense that exceeds that amount, like medical treatment expenses. On the other hand, payday loans are good for small emergencies.
High interest rates
The biggest downside of payday loans is the high interest fees. Compared to a credit card loan, these can be up to 10 times bigger, but that’s the price you pay for not having to go through a lot of paperwork and credit check. The interest fees are roughly $15 for every $100 you borrow on the average, which makes bigger loans a bad idea.
Once you make a payday loan, you will have to return it whole from your next paycheck, unlike credit card loans that allow you to make smaller payments. This can be a problem depending on the amount of money you’ve borrowed, and there is also no grace period, so expect additional fees if you don’t return the money on time.