Payday loans are a financial gray area. Often touted as a must-avoid brand of loan, they’re earned themselves a bad reputation from extremely high interest rates and a dearth of loan sharks and scammers who look to cash in on irresponsible customers. Payday loans have proven so problematic to families that some states and countries have banned them completely.
All that said, payday loans still have their merits. Designed to get struggling families the money they need to survive from one payday to the next, payday loans are quite useful for staving off sudden debt – but only if you manage them responsibly. Otherwise you may run into trouble down the road, and if there’s one thing you want to avoid its not paying a payday loan off in time.
Here are some positive aspects of payday loans. Consider each one carefully before deciding if a payday loan is really for you.
– They’re short loans. The interest rates are high, true, but fear of falling behind is often enough to drive borrowers to pay them off with plenty of time to spare. The companies themselves won’t warn you of the dangers of not paying, of course, but there’s enough cautionary information online to put would-be borrowers on the right track.
– They don’t require much by way of a credit rating. One of the huge pitfalls often faced by families is a poor credit rating, and larger institutions won’t lift a finger for fear of not being repaid in time or, worse, not being repaid at all. Payday loaners may never ask you about your credit rating, allowing poor-credit families to get the money they need.
– They’re quick. The application process for a payday loan is often as short as overnight.
– They’re available online as well as in person, making payday loans rather convenient. Be leery of online companies, however, as the anonymity of the Internet makes hiding a scam even easier. There’s no telling who’s on the other side of the computer screen. Regardless of the company you choose, follow up on their reputation before applying for a loan.
– Lenders don’t generally ask what the loan is for. You can use a payday loan for just about anything, so long as you repay the loan by the maturation date.
– And, last, you can’t borrow that much with a payday loan. That may sound like a disadvantage, but given that payday loans have such high interest rates you don’t want to get much in the first place. Having relatively small increments allows you to swerve around the temptation of getting way more than you need and suffering the consequences down the road.
So long as you’re financially savvy you should be able to navigate the bumpy road of the payday loan without too much trouble. Always educate yourself on the company and the loan you’re getting before committing to anything, and if you’ve gone online for the loan make sure such agreements are legal in your area.