What are Payday Loans?

17 Sep

Payday loans are short-term loans offered by many lenders as a lifeline for those who are cash-strapped shortly before the monthly pay is released by employers. One of the biggest reasons for the increasing popularity of payday loans are unplanned emergencies particularly when it affects people who don’t have an emergency fund set aside. When this happens and one’s budget goes out of whack, the only reasonable option to pursue is to get a payday loan to make ends meet until the next payday arrives.

By and large, payday loans from a place like www.fastcash.org, are great because they don’t have the typical limitations of more sizable loan amounts. For example, many lenders now offer payday loans via websites which means one can already get a loan without having to visit the lender. By simply filling out the forms and sending out your application, you can actually hope to have the money released by the end of the day, if not the succeeding day, so you won’t have to take time off of work for it.

Another advantage with payday loans is that these are very small loans which are easily manageable. Often, payday loans only amount to a couple of a hundred dollars maximum or can even be as small as $50. The amount obviously depends on how much you earn per payday as the terms often require that the loan is paid during the next payday and not a day beyond that. In this sense, one can always be confident that the debt won’t remain outstanding for very long, giving many people the license to apply for one whenever circumstances become tight.

On the flip side, payday loans do have their fair share of concerns that all borrowers must be familiar with. First, because these loans do not require a collateral asset, the interest rates may be higher than more sizable loans. It’s not uncommon to see $100 payday loans with a $15 interest for 10 total days of borrowing time. That amounts to a 15% interest which is only mildly acceptable because the amounts involved are small. One would be pressed to find a loan with 15% interest that is attractive to people who are working with big sums of money.

Another concern is that payday loans are often abused by people who are in bind. Instead of finding ways to resolve their debt, they resort to loans to cover for their expenses knowing fully well that they will have to apply for a loan again shortly after payday since their wage is already earmarked for loan payments. This is not a sustainable way to live but it is made possible by easy-access loans.

It is important, therefore, to use payday loans responsibly. Don’t get a loan just because you can; rather, think about the implications before deciding to do so. Always make sure you get a favorable loan and one that you can pay immediately without having to do it again so you can maintain financial independence amidst all the personal challenges that you face on a daily basis.

One Response to “What are Payday Loans?”

  1. Courtney April 26, 2013 at 8:46 am #

    I designed a huge mistake in making use of pay day loans to assist settle payments throughout a tough time. Now I can not receive from under them and it is difficult to pay on my small regular debts. My credit is 495 therefore it’s been challenging financing.

    Can there be help for me personally? After i could possibly get these financial loans compensated I’m able to result in the monthly pay’ts.

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