Payday loans are a great option when you need a loan quickly. A payday loan can usually be obtained within a few minutes once you fill out the application. The lender will give you a few days to pay back the balance of the loan, plus any interest and fees. The due date on the loan is normally determined by the date your next paycheck will arrive; this is why these loans are called payday loans. As with any lending product, there are both advantages and disadvantages associated with payday loan products.
How to Obtain a Payday Loan
When you apply for a payday loan, you will be required to fill out an application with basic personal information, such as name, address, employer and income. You will also need to provide a photo ID, as well as your most recent pay stubs that show proof of income. You will also need to have a checking account, as you will write a check to the lender for the amount of the loan plus applicable fees and interest.
Advantages of a Payday Loan
As stated above, payday loans provide nearly-immediate access to cash. These types of loans are especially helpful in the event of an emergency. In addition, since the lender does not check your credit score when you apply for a payday loan, these types of lending products are great for those with poor credit or no credit. As long as you have a job and a checking account, you can usually get a payday loan.
Disadvantages of a Payday Loan
There are also some disadvantages involved with using payday loans. The most detrimental is the high fees and interest rates associated with these loans. In addition, some borrowers may find it difficult to pay back the loan with their next paycheck. It can also be difficult to break the cycle if you use these loans on a regular basis; some consumers get in over their heads and find that their entire paycheck goes to repaying their payday loans. Then they have to take out more payday loans just to survive. Many states have passed laws restricting the number of payday loans a person may take out in a certain period of time.
Payday loans can help out if you are in a temporary tight spot. However, be sure to use these products responsibly and don't rely on them too heavily.