Payday loans can be easy access to money for people with poor or no credit options. However, since many people are wondering whether they should decide on this option in a critical situation and whether a payday loan comes with some risk, we prepared an article to help you with all of these questions. We understand that it is very difficult to figure out things of this kind on your own. Let’s see how does loan work, how you can qualify for it, and the pros and cons that come with the loans.
What is a payday loan and how does it work?
In most cases, a payday loan refers to a loan that goes from $100 to $1,500. Also, it comes with a specific two-week term. Payday loan has some other names that can sound familiar to you such as cash advance, short-term loan, fast cash, paycheck advance, etc. In order to repay this type of loan, you need to write a post-dated check for the full balance.
Also, you need to include fees or choose the option of providing the lender special authorization to electronically debit the funds from your bank, credit unit, or repair card account. In the case you do not repay the loan on the due date, the lender will cash the check or electronically withdraw the money from your account. These types of loans generally are targeting people with a bad financial situation, that do not have credit options. In other words, people who do not have access to cash immediately.
Source: experian.com
How do you qualify for a payday loan?
If you are needing this type of loan, you should not worry whether there are some special requirements for getting it. It is quite easy to be qualified for a payday loan. All you need to do is to have an open checking account. The borrower of the payday is also required to prove the income and to provide some type of identification. After that, a payday loan lender will not run a credit check or ask any questions.
Due to the fact that lenders do not check the credit score, many borrowers find themselves in a payday loan trap. In other words, they get trapped in the circle of being unable to pay the debt back with the specific term. However, when you are looking for a source from which you can borrow a payday loan, you should find a reliable one. If you are needing this type of help, you can contact trustworthy and credible vivapaydayloans.com.
What are the advantages of taking a payday loan?
Source: checkcity.com
Let’s see what benefits can you get if you decide to take a payday loan.
Payday Loans are easy to access
The primary advantage of obtaining a payday loan is the fact that they are so accessible. You can literally get the money within 24 hours. Therefore, you absolutely have no reason to worry about how to get the money if you need cash right away. There are even some online applications for getting a payday loan which means this option is available to you 24 hours a day, 7 days a week.
Payday loans have fewer requirements than other loan types
As we already mentioned, there are no special requirements when it comes to obtaining a payday loan. On the other hand, when it comes to the traditional lenders, you can expect that they will ask you for a Social Security number, photo ID, proof of income, a credit check, and verification that you can repay the given loan. In the case of a payday loan, which is fast cash, you just need to be at least 18 years old to apply, have a Social Security number or ID, an active bank account, and some source of income. Getting a payday loan is a way more convenient way of getting cash.
Source: idfcfirstbank.com
In the case of getting a payday loan, they don’t check your credit
When it comes to any traditional type of loan, you are going to need good credit that needs to be approved. However, this is not the case with payday loans, they are not requiring your credit history. This also means that you will not be faced with the hard credit inquiry which means that it can not lower your credit score by a couple of points.
This is an unsecured loan
One more thing that you should know when it comes to a payday loan is the fact that, unlike a car loan or mortgage, it is not secured by personal property. More precisely, if you do not pay the payday loan, the lender can not take your property as the outcome. Still, even though the payday loan is not secured, payday lenders are having the access to your bank account of yours and the condition of the loan which can put you at a different type of risk. More precisely, they can take some measures such as taking you to the court.
Source: time.com
What is the greatest risk of taking out a payday loan?
Now, we are going to discuss the risk of taking a payday loan. In general, the first risk we mentioned above refers to the fact that lenders can take you to the court in case you do not pay the loan. Expect that, you should also know about some other types of risks. Payday loans are expensive since they can charge high fees that need to be repaid in a very short period. This depends on the person you are taking the payday loan from.
Therefore, you should find a reliable source. Despite this disadvantage, many people that take payday loans end up in the cycle of payday debt. You can end up in a cruel cycle that will force you to keep borrowing more and more money constantly. Therefore, you need to be very careful and responsible. You will need to pay a huge amount of money in a short time such as a few weeks. Because of that, if you decide to take a payday loan, make sure to find the money and give it back.
