If you need spot cash and your only option is online payday loans, you’ll probably see only its good side. Learn more information about online payday loans including its pros and cons before making a decision.
Supporters of payday loans believe that it helps people solve their present financial problems because they are granted money even with no credit check. However, critics claim that it is very expensive and only leads people into an unending cycle of debt, more information about payday loans online. Online payday loan direct lenders - published here.
What is a Payday Loan?
Payday loans, also known as short-term, unsecured loans or cash advances are loans granted to applicants in the amount of $100 to $1, 500. Applicants can apply online or through direct lenders in their state.
Payment is usually two to four weeks after receiving the loan. You can issue a post-dated check or provide the online lender an authority to electronically debit the payment from your bank account.
- It is expensive
It comes with pricey interest rates, fees, and charges. The annual percentage rate (APR) is 400 percent. For comparison, APRs of credit cards are only about 17 percent.
This is the reason why critics say that it only pushes people to lose more money and make them unable to settle their financial standing for a long time. Some people end up rolling over on their loans. They pay only the fees and interest rates and continue with the loan.
Ohio, Nevada, Idaho, Utah, Texas, and Virginia are some of the states that have APRs of more than 600 percent. State and federal laws are stricter in the 15 US states and the District of Columbia as they set a limit of 36 percent or less in APRs.
- Long-time online payday loans can lead people to a cycle of debt.
One ill effect of this type of loan is leading people to a cycle of debt. Once you fall behind the due date, it becomes hard for you to recover.
The interest rates, fees, and charges are summing up. And since lenders can take out the payment automatically from your bank account, you don’t have any control over it.
You can be charged with overdraft fees that are making it more difficult for you to manage your finances. This can affect your credit score that makes it impossible for you to take loans in the future.
- It’s hard for you to save.
When you borrowed money from an online lender, it is hard for you to save because you know that your next paycheck is intended for paying your loan. There are higher chances that you’ll be stuck in debt.
Why? The moment you pay your loan, the harder it is for you to pay your bills and personal expenses.
- It’s immediate cash.
The application for payday loans online is easier and faster than any type of loan. You can apply and receive money on the same day.
The earlier you receive it, the easier it is for you to settle your payments and debts. This is the reason why more people with bad credits and no credit history are the target of this loan.
- Fast approval.
As mentioned, your application can be granted fast and easy. When you process it online, you don’t have to go out of your home to bring the documents and sign all the papers.
Online processing cuts the long queues and avoids the hassles. If you have a bad credit history, you can get approved for this loan because they don’t look at your credits in the past.
- You can use it for any purpose.
Unlike car loans and mortgage loans that are only intended for your car and house alone, payday loans can be used for whatever purpose you want. If you need it for a medical emergency or car repair, you can use it for that purpose.
- You can apply for any amount of loan.
You can adjust the amount of short-term loan that you’ll be applying online. You can take a loan amounting to $100 to $1, 500.
For instance, if you only need $500, you don’t have to take bigger loans. Some lenders allow higher amounts but expect to have stricter requirements.