As more people are becoming victims to the harsh economy, payday loans are gaining popularity. These short term loans are making it possible for individuals to borrow money until their next paycheck. For some, this can be a life saver, but others have found these loans to become a nightmare. So, it’s important to learn the pros and cons of payday loans before one enters into the process.
There are definitely some advantages of payday loans, also known as cash advances. Their biggest attribute is probably that most lenders do not perform credit checks or ask for credit reports. This is a big plus for those who are financially in need and do not have a good credit score. Since a low credit score makes it very difficult to obtain a bank loan, the payday loan is a beneficial option for those with bad credit. Also, payday loans can be issued in a very short amount of time. Most people will have access to the loan within a day, if not a couple of hours. Therefore, this cash advance can be their only source of help in an emergency.
Although payday loans have many pros, there are also many disadvantages that come with the borrowing. For example, the cash advances come with a high interest rate. Therefore, in the short term these can be helpful, but can hurt a lot in the long term. Also, many consumers easily become dependent on the payday loans. They forget how to save money and rely on the cash advances to pay their bills and utility costs. Furthermore, many of the lending companies can be deceptive or misleading. The customer can fall into their trap and be swallowed by more debt than he imagined.
Since payday loans are becoming more common in today’s society, it is important to be informed and educated before one considers the borrowing. The positive aspects show that this is a quick easy fix to a financial crisis. However, the negative aspects portray that the quick fix can have long term destruction. In short, a payday loan can make you or break you.