The Advantages and Disadvantages of Payday Loans

When you are in urgent need of financial assistance, there is usually not enough time for you to go through the traditional bank application process for a loan. The truth is, most crises that require an immediate loan are needs that would tend to disqualify you from a bank loan anyway. Banks don’t loan money to just anyone, and they need to know that the money will be repaid, on schedule, and that the loan is for a purpose of which they approve. If you need money to buy a house, or a new car, or remodel a business, then those are uses that a bank would approve of.

However, if you need an emergency loan to keep a utility from being turned off, or to buy gas for your car in order to get to work for the rest of the week, or to buy groceries to feed your children until payday, then the sad fact is that a bank is not going to help you. Needs like those are genuine and very understandable to an average working-class person, but they are not the kind of things that white-collar bank loan officers want to review. They don’t want to see anything that indicates you might not be able to repay the loan. By their very nature these kinds of emergencies set you apart as a bad security risk and probably disqualify you from any bank loan.

What you really need in these situations is a payday advance loan. A payday advance is a short term loan in a small amount (usually around the size of your paycheck), designed to help you deal with financial requirements that you don’t currently have the funds for. Due to the fact the loan is of a short term nature, u will be expected to pay it back within a short while, usually by your next paycheck. Repaying the loan shouldn’t be a problem since it is small.

When applying for a payday loanyou generally secure the loan with either a post-dated personal check or by signing over the paycheck that you are scheduled to receive. There’s no credit check, and the loan company doesn’t care why you need the money. They already know it’s an emergency, or you’d probably have gone to a bank. They money is made available to you in a matter of hours. Those are extremely important benefits. Also, many companies now offer these loans online. There’s no need to go anywhere. You just fill out a simple online form from the comfort of your own home, and the transaction is completed. The online lender transfers money directly into your bank account, and on the scheduled day the repayment is automatically withdrawn. You don’t even have to remember to make the payment, because it’s all done automatically.

The only potential drawback of a payday loan is the ease with which they can be obtained. The loan company, unlike a bank loan officer, doesn’t make any judgment about why you need the loan, or your ability to repay. That’s all put on you. So, it is possible for you to obtain a loan that, if you thought about it more carefully, you shouldn’t take out or you don’t really need. That’s really the only con of a payday loan – they are easy to get and require you to do all of the thinking, because there isn’t a bank officer to step in and caution you that you might not be borrowing the funds for a wise purpose.