Payday loans are just one of many forms of credit that you can access to help ease your financial situation. They are often issued by smaller lenders and online rather than by banks or large storefront lenders, but they are growing in popularity across the world. In the United States payday loans are regulated at the state level and they are also well regulated in Europe. Depending on your personal situation there may be many benefits to taking out a such a loan, and here are just some of them:
They Tide You Over Until Payday
The original purpose of a payday loan was to give the borrower a small sum of money to tide them over until their next pay check arrived – hence the term “payday” loan. Most loan terms today can still be worked out in this manner or usually for around two weeks. This makes them the ideal choice if you have accidentally gone over your month’s budget or face an unexpected bill, which can be easily covered once you get your next round of wages. Think of it as a cash advance from your boss, but from a lender instead.
Payday lenders deal in relatively small amounts of money ranging from a few hundred dollars to £1,000 or more in rarer cases. Because the amounts are typically on the smaller end, it’s not likely that you will end up struggling to pay the money back unless you were not honest in the application to begin with. Once you’ve paid off one payday loan it’s very easy to apply for another, and there is no limit on how many times you can do this. In the long run it’s a safer option borrowing small amounts every so often, than taking out one large loan in one go that you could end up struggling with.
Short Term Commitment
A standard payday loan is typically due just two weeks from the date it was issued, making it a very short term commitment compared to other loans. This means you do not have to worry about months down the line when you’re still paying off the loan and may be faced with other financial problems, which can be the case with a longer term commitment. In many cases the loan will be deposited and repayment taken automatically from your bank account. It’s the perfect stress free option if you just need to buffer some bills until your pay check arrives.
Easy To Understand Fees
Because payday loans are a short term commitment that you repay in one lump sum, with no installments, it’s very easy to understand how much it will cost you. Put away that calculator! If you make this repayment on time there is only one single finance charge and this is clearly presented to you before signing any contracts. Although it may be based on an Annual Percentage Rate, all you have to think about is that one fee. What’s easier than that? The only time extra fees and interest is added is if you fail to make the repayment on the agreement upon date, but this is still clearly outlined in the agreement.
Can Apply With Bad Credit
Payday lenders believe that even those who have made poor financial choices or struggled in the past, still deserve a lifeline if they need help with this month’s budget. That’s why they commonly accept applications from those with bad credit. Because the amounts are low and the commitment is short, it’s not viewed as the same level of risk as a larger and longer term loan. So if you don’t have the best credit history and cannot get a credit card or traditional loan, a payday loan might be just for you.
No Faxing or Waiting In Lines
Payday lenders are often a step ahead of traditional lenders when it comes to technology. Most loans of this type are issued in minutes online, without the need to fax documents or wait in arduous lines at the bank. As long as you have an internet connected device you can apply for a payday loan right now and have the cash in your account by the next morning if accepted.
Improve Credit Score
Taking out a payday loan is a great way to rebuild or improve your credit score fast. Think about it, because the loan is only outstanding for around two weeks, your report will be updated in the blink of an eye. If you take out payday loans on a semi-regular basis, eventually you will have lots of examples of you successfully meeting your financial obligations and your score will rise accordingly. Other lenders will see you as a reliable borrower and the range of credit you have access to will broaden.