Times come when people are burdened under a huge financial crisis and they don’t have anyone from whom they can borrow money. During such situation people just want urgent money and decides to take a payday loan to get rid of their crisis. Well, payday loans can prove to be either a bane or a boon depending on the borrower.
Basically, a payday loan is a type of loan that is given on an urgent basis for the short term. You may think it’s really good! But here is the catch, the rate of interest charged on such loans is very high and failing in timely repayment may lead to the doubling of the interest. Yes, it is true that payday loans can prove to be a useful tool in an emergency situation, but to have a positive experience of such loans; you ought to use it correctly and with good intent.
No matter how convincing payday loans may sound, the reality is that it has been in the controversy for many years. In fact, payday is widely infamous for damaging the finance of many people and leading them into the trap of other debt. So, it is important that the people get aware of its advantages and disadvantages before deciding to go for payday loans:
Provide a chance when no other option is left
If you are facing a severe financial crisis and you have no one to help you out, then a payday loan might be a good option for you in such a situation.
Easy to receive
One good thing about or you can call the forte of payday loan is that it’s quite easy to obtain. The borrowers do not need any kind of credit check or an access to credit cards. A normal person above eighteen years can apply for payday loans just by showing its monthly salary slip or drivers’ license.
Fast and convenient
Applying for payday loans is very convenient and the borrowers won’t have to fill any kind of paper works that happens in the traditional banks’ loan system. After submitting the application form, the borrower request is approved easily and the fund is deposited in their account within hours or days of applying.
One of the biggest drawbacks of payday loans is that the borrowers are charged with a high rate of interest. Well, this is a short-term loan and the lenders definitely want to earn profits. Generally, the interest rate lie between 300 percent to 900 percent and the borrower will have to pay a huge amount of money in the end. This is the reason why most people don’t want to take payday loans.
Easy to fall into the trap of heavy debt
It may really be surprising for you, but most of the payday loan companies earn profit from the customers who cannot repay the loan on due time and end up by expanding their loan. This lead to the increase in the amount of interest added to the overall previous loan.
Cheating by the lenders
Many times the lenders take the advantage of payday loans by not disclosing the right information to the borrowers. The payday lenders use manipulative marketing strategies to find loopholes in the contracts that they sign with their customers.
Summing it up all, a payday loan can be very risky and you might end up in the trap of heavy debt. So, it is a very crucial decision and you will have to take every step with caution.