Wiegers Financial & Benefits
  • We help business owners, households, retirees and students reach their financial goals through expert investment and insurance planning.

  • We help business owners, households, retirees and students reach their financial goals through expert investment and insurance planning.

  • We help business owners, households, retirees and students reach their financial goals through expert investment and insurance planning.

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Payday Loan

Wiegers Financial & Benefits

Unfortunately, no one in the world is immune from unforeseen circumstances. Whatever our financial cushion and no matter how big the savings account, sometimes it happens that we urgently need money. For such cases, there are payday loans. But before you take out such a loan, you should know more about it. 

What is a payday loan?

Most likely, you have at least heard about a payday loan. It has several names, such as a cash advance, a short-term loan, a bad credit loan, a paycheck advance, and others. 

A payday loan is a small, short-term loan. Usually, you can borrow from $100 to $1,000 for a term of two weeks or a month. Such a loan is repaid in one payment the next day after receiving the salary. These loans are also available to people with bad credit history, which makes them quite popular. After all, whatever your credit history, there are emergencies in which you need money.

How do you qualify for a payday loan?

This type of loan is quite easy to qualify for. The borrower needs an open checking account in good standing. In addition, you need to verify your income and have an identity card. Depending on the lender, some required documents may be added, but usually, the list of requirements is quite short.

Pros of payday loans

Payday loans have many advantages. They are easy to get, there are no hard requirements for payday loans, and they do not require collateral. 

Easy application and approval

The days when you had to go to a credit union or a bank are over. You can get a payday loan without leaving your home by doing it online. Many lenders offer online applications that can be completed in 10 minutes or less. Since they do not require a hard credit check, many borrowers are immediately approved for a payday loan. 

Fast access to cash

A payday loan is one of the fastest ways to get money. Applications are completed quickly, lenders approve applications quickly as well, and borrowers can receive their money the same day or the next business day.

Fewer requirements than in other loans

To get a payday loan, the borrower must be over 18 years and verify their identity and income. This is much less than needed for other types of loans and makes it possible to lend money even to those with a bad credit history.

No hard credit inquiry

Lenders do not ask for your credit report and are not interested in your credit history. So, firstly, it enables people with bad credit histories to use payday loans. Secondly, it does not affect your credit score in any way.

No collateral

The borrower does not risk his property, which is undoubtedly a plus. However, if the borrower does not repay the payday loan, he will have to deal with collection agencies or even with the court.

Cons of payday loans

Nothing is perfect, so payday loans have their downsides. For example, many people are wary of high-interest rates and the likelihood of falling into a debt cycle.

High-interest rates

Payday loans have high-interest rates. Due to the fact that the borrowing amounts are not large, it does not feel so damaging, but you would never take out a personal loan with such interest rates. Many states like Vermont and Arizona have even outlawed payday loans due to these high-interest rates. 

Short repayment period

It can be difficult for borrowers to repay the total amount in such a short period. Therefore, it is important to make sure that you can do this before taking out a payday loan. Otherwise, you may end up in a debt cycle.

Lenders have bank account access

On the one hand, it can be convenient to give a lender access to your bank account. In this case, you do not need to worry about the fact that you mixed up the dates - the borrowed amount will be withdrawn automatically. However, on the other hand, you are not in control of this process, and this can create inconvenience.

 

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