What are the advantages & disadvantages of payday loan?

Submitted by kevin.craig672 on 14 June 2010 - 7:02am

At any moment the unexpected expense can knock at your door! It can be either a medical bill or your car repair bill as emergency situation would not seek permission to enter your life. There are many people who tackle these financial situations by borrowing money or paying off by credit cards. But there are a huge number of people who rely on Pay day loans as these are short term loans and instantly meet the demand of the borrower.

These payday loan does not require a borrower’s credit record for the sanction of the loan. It gets transferred into the debtor’s account the very day applied for it.

Warning: The loan comes with a high interest rate and needs to be paid off by next pay day. Once the amount is rolled it might burn a hole in your pocket and in case you fail to repay the loan,payday loan settlement would help you to come out of debt.

Looking for a payday loan? Follow the simple steps:

In order to apply for a payday loan there is no criteria unlike other loan programs. You can apply for a payday loan through Internet or on phone as there are innumerable these kind of loan outlets in US. Your loan would be transferred into your account within 24 hours as you submit your name, phone number, address, bank details and prove that you are employed.

Most of the companies can ask you to: Give a post dated check of the total amount off loan you have taken and it would en cashed on the next payday.The amount can also be deducted from your checking account on the next payday.

As this loan program has certain flaw it would better to know it before you apply for any loan program. Here are few pros and cons related to it that you need to be aware of it. This article is going to show you all the advantages and disadvantages of payday loan.

Advantages of Payday Loans:

  • Easiest and fastest approved loan in recent times.

  • Application method is very simple you can avail it through online or over phone.

  • The payday loan does not have the hassle as you do not need to produce a credit report in order to get a loan. A monthly pay slip and bank account information are the only document required to get a payday loan.

  • Within 24 hours the loan application would be accepted and the cash would be in your bank account. With the increasing competition in the field of payday loans there are many companies which give the cash within couple of hours.

Disadvantages of Payday Loans:

  • Beware that a payday loan can take a toll on your pocket. The APR charges are too high the fee ranges from $15 to $25 for every $100 lent for a fortnight.

  • If you fail to pay with in the due date then payday loan becomes very expensive. If you default in the repayment plan then you land up paying half of the loaned amount as interest coupled with the fee and the total amount. You might fall under debt if you have extended the repayment plan for a long time.

  • Payday loans are under the strict regulation of the attorney general’s office of the individual states. The policy varies from state to state as few states allow up to $400-$500 but there are states who lend up to $1000.