When making a payday loan, it is quite essential to weigh in the advantages and disadvantages of having a payday loan. This allows you to strategize on addressing your loans properly.
Here are some of its advantages:
- Have cash advances for immediate needs
Cash advances are good as long as you can pay them back on time and does not allow you to fall short of your income for the following month. Cash advances can be used for a number of reasons especially for small expenses that need to be addressed immediately.
- Still get a cash loan even with a negative credit score
Having a negative credit score restricts the borrower from being granted a fast cash loan. The payday loan allows an individual to be able to make a loan without the credit
- No collateral needed
A payday loan is one of the best loans to apply for. You don’t need to give a collateral to support your loan. A check that covers the principal and interest and finance charges is sufficient.
Some of the disadvantages are:
- Requires a steady income and checking account
Before you can make a payday loan, you will be required by the moneylender to have a steady source of income and a checking account. The steady source of income to ensure the probability of payment and a checking account where the borrower can write a check which serves as a guarantee of payment.
- Not the solution to your financial concerns
The primary reason why people go for a payday loan is to use the money for expenses that current income could not cover. Getting a payday loan for this reason only creates bigger expenses for the coming month.
- Loan charges high interest rates and other fees
The nature of the payday loan is short term and for a small amount only. For lenders to earn from this type of loan, they need to charge high interest rates and fees.