The first thing you should know about payday loans is that they are a short-term form of unsecured lending that is meant to act as a small cash advance until your next paycheck arrives. As a result, these loans tend to come in modest amounts typically $1000 or less.
They are also different from traditional loans as repayments are not made in installments over a set period of time but rather the entire lump sum borrowed + interest is due in full once the next payday arrives. These loans are also easier to acquire, as they have less stringent eligibility requirements compared to personal loans.
Furthermore, you can get access to the best payday loan with instant approval from the comfort of your own home by using online broker services such as iPaydayLoans. This is in contrast to most bank loans that typically require you to visit a physical branch and submit the loan application forms in person.
In addition, the interest rates for payday loans tend to be significantly higher compared to traditional loans. While the average APR for personal loans tends to range from 6% to 36%, payday lenders can end up charging APRs comparable to 400% or more.
It is for this reason that payday loans are heavily regulated with many states having their own limits and restrictions as to how much payday lenders can charge, how much consumers can legally borrow, how many rollovers lenders can give out, etc.
These laws and regulations are implemented to ensure that consumers do not fall victim to any predatory lending practices.
How Do Payday Loans Work?
Payday loans can either be obtained at a brick-and-mortar store or by taking the easier option from iPaydayLoans. And while most traditional lenders will usually conduct a credit check before approving your loan request, payday lenders do not make loan decisions based on your credit rating.
Instead, most of them are more interested in your ability to repay the loan, which is why they require you to provide proof of steady income in your application. Furthermore, payday lenders don’t charge traditional interest rates on their loans. In most cases, you can expect them to charge a flat rate that typically ranges between $10-$30 for every $100 that you borrow.
In terms of repayment, most payday lenders will require you to set up autopay on your account, so that they can take the funds from your bank account once you receive your next paycheck. If you are unable to afford the payment, the payday lender may end up offering you a “rollover.” This essentially means that your loan is moved over for another month to provide you with extra time to pay for a small fee.
If you would like to know more about payday loans from iPaydayLoans, you can also check out the author Matthew Du’s page for more information.
What Are The Pros of Payday Loans?
There are a few key advantages to borrowing a payday loan and some of the main benefits include:
Fast & Easily Accessible
One of the most significant advantages of this form of lending is that they are convenient and easy to access, compared to traditional lending products.
For one, you can carry out the entire loan application process online, which should only take you a few minutes to complete if you use a credit service named iPaydayLoans. They are also processed much faster with most payday lenders depositing your approved funds within 24 hours.
Fewer Eligibility Requirements
The approval rates for payday loans are significantly higher than most other types of loans, which makes them ideal for borrowers that can’t access funding from a bank or credit union, due to a bad credit score. In most cases, all you need to qualify is to be 18 years or older, have a valid government ID, have an active bank account, and also prove that you have a steady income stream.
They Are Unsecured
Payday loans are a form of unsecured lending, which means that it is even possible for borrowers with a bad credit score to secure funding without having to put up collateral.
While most traditional lenders would usually require you to stake an asset like their home or car, payday lenders are more than willing to approve your loan request without much hassle.
What Are The Cons of Payday Loans?
While payday loans are a quick and convenient way of accessing money online with no credit check, this form of lending also comes with significant downsides to consider. Some of these include;
These loans are expensive
The main issue that most people have with payday loans is the fact that they are very expensive. As mentioned before, some lenders apply APRs that can go up to a few hundred percent.
This can often end up causing the total cost of borrowing to spiral dramatically and with their short repayment periods, it can often be difficult for borrowers to make their repayments on time. It is for this reason that you should always review other lending options first before you make the decision of taking out a payday loan.
Can Be Hard To Find Legitimate Lender
The online lending market is heavily saturated with many lenders targeting consumers with bad credit and low incomes while claiming to offer competitive loan rates and terms. It is for this reason that many states imposed serious restrictions on these types of loans in an effort to ensure that borrowers do not fall for predatory lending practices.
You can find some help on iPaydayLoans, as they tend to vet all the lenders they partner with, which ensures that you only borrow from honest and licensed payday loan providers.
Easy To Fall Into Bad Debt
Payday loans often come with high-interest rates and short repayment periods, which often makes the likelihood of borrowers defaulting high. And when this happens, the only option available to borrowers is to roll over the debt but this can often end up causing them to enter into a debt spiral.
Naturally, this only complicates the individual’s financial situation and makes it that much harder to get back on their feet in the long run. It is for this reason that these loans are only meant to be borrowed if you are 100% confident that you can afford to repay the debt once your next paycheck arrives.
While payday loans are a popular choice for consumers that find themselves faced with unexpected bills or expenses, whether you should apply for one will usually depend on your current financial situation. They are suitable if you simply need a small cash fix as you wait for your paycheck to arrive but it’s safe to say that they are not a good idea if you live paycheck to paycheck or have an unstable income.
Aside from that, you should always check to see if the lender is legally licensed, otherwise, you could end up falling victim to unscrupulous lending practices. Luckily, there are online broker sites like iPaydayLoans that you can use to instantly find legitimate loan providers and even compare offers to secure yourself a good deal.