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CASH LOANS
A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a small, short-term unsecured loan, “regardless of whether repayment of loans is linked to a borrower’s payday.”The loans are also sometimes referred to as “cash advances,” though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Traditionally, payday loans were offered by cheque cashing businesses as an additional service, but more recently a proliferation of online lenders have emerged that has made it easier than ever to get one. However, the big downside is the cost of borrowing this way.
Who Uses These Types of Loans
Generally, anyone with a checking account and steady income can obtain a payday loan. However, it is most common for borrowers who don’t have access to credit cards or savings accounts to use this type of lender. Since these loans don’t require a credit check, people with no credit or credit problems often turn to payday loans.
Benefits
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You may be able to borrow more than with a credit card.
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Your loan repayments may be fixed amounts. That means your repayment amount is going to be the same every month and it’s easier to budget.
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The interest rate you pay on a loan is also usually fixed (but not always).
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You can choose how long you’d like to take to repay the loan. Remember the length of a loan will affect the amount you are charged in interest.
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You can consolidate several debts into one loan, potentially reducing your monthly repayment costs. But be careful, as this may mean extending the length of the loan and so paying more overall.
How quickly do you receive a payday loan?
Payday loans usually have a quick turnaround time, although the actual time is different for each lender. Upon approval, some lenders may be able to transfer you the money within 60 minutes, while some may be able to transfer you the money within one business day or more.
Should you Apply for a Payday Loan?
A payday loan may be suitable for you if you are hit with a sudden one-off expense, and can’ t find the money quick enough anywhere else . But as we said previously, a payday loan is an extraordinarily expensive way to borrow money, so should only be seen as a very last resort.
Needing to borrow from a payday lender can also be symptomatic of a larger problem with your finances. At the less extreme end it signifies that you haven’t enough saved to cover life’s little emergencies , but in more extreme cases, it could be the result of a debt problem that a payday loan could make much worse.
How do you find a reputable payday lender?
Most payday lenders operate online, so you will be able to use their website to judge their reputability. When looking at their site you can see how transparent they are with information regarding their fee and payment structure, and you can also see how easy they are to contact.
Choosing the right cash loan
Of course, different lenders offer different types of loans, so be certain the company you borrow money from offers what you need. If you need immediate access to cash, a bank loan may not be the right choice as their approvals process may to be longer than an online lender who uses IT platforms to speed up the approval process. By the same token, if you need to borrow a large sum for a long period of time, ensure that the borrowing limit and length of term both meet your needs. Please remember high cost, short term credit (like Sunny) is an expensive way to borrow and is not suitable for borrowing over long periods.
Don’t forget the secondary features of different loans outside of their basic structure. Not all short-term cash loans, for instance, are built the same. Some have flexible pay dates, some have rigid terms. Reviewing these factors carefully can get you the best benefits and the best cash loan.
How to get the best cash loan deal?
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Don’t just accept the first rate you are offered by your bank or building society.
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Shop around to see which providers are offering the cheapest APRs. Compare representative APRs (but remember that you may end up paying more if you have a poor credit history). A comparison website can help you do this.
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Consider peer to peer loans especially if you have a good credit rating. These loans may offer lower interest rates and are available for smaller amounts. They are featured in most comparison tables.
Drawbacks
The major drawback for consumers who use cash loans is that they’re expensive. A fee of 15 percent or more of the loan amount is not uncommon, according to the Federal Trade Commission (FTC) in its consumer alert titled “Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives.” The FTC advises consumers to compare the annualized interest rates of cash loans to other forms of financing to see just how expensive they are. Also, if you fail to repay your cash loan when your paycheck arrives, you may have to pay an additional fee to extend the repayment period or get new financing to cover the cash advance fee.
