By: Augusta Schubert

Payday loans are a fast and easy way for people to get money in an emergency, without creating long-term debt. Emergencies happen to everyone, and sometimes a few hundred dollars  is all that is needed to resolve a crisis. When I was a child, my parents did not have a lot of money left  after paying bills. My siblings and I were home-schooled by my mother, so we lived on my father’s income alone. If our car broke down between paychecks my parents would get a loan to pay for repairs. Payday loans allowed my mother to remain at home, and helped my family to survive during some of our most difficult financial times.

Advantages of payday loans are their speed, and simplicity. The only paperwork needed to receive a payday loan is a post-dated check, pay stub, and bank statement. Credit checks are unnecessary, allowing people with poor credit to receive loans. Poor credit, and short employment history disqualify many people from bank loans, leaving them with no where to turn in an emergency. Once the borrower exchanges paperwork with the payday lender, he or she can walk out with the needed money within 30 minutes. Returning to the payday loan office to repay the loan is not require. Your personal check for the amount owed is simply deposited, and withdrawn from your checking account-on payday, of course.

Another big advantage of payday loans is the privacy they offer. When applying for a loan very few questions are asked. The borrower is not required to state the purpose of the loan.There are no discussions regarding credit report scores, or lectures from disapproving loan officers. The human resource person at your place of employment will not be contacted to verify your salary. Payday loans also allow people to avoid the embarrassment of asking for loans from friends or family members. The overall privacy of payday loans makes them good options for those who want to keep their financial status private.

The fact that payday loans are merely short-term debt is another advantage. If these loans are paid promptly, they have very few disadvantages. The borrower receives the needed money, and is not bogged down with years of payments afterwards. Long-term debt, on the other hand, has many disadvantages. First of all, it takes a long time to build up equity with long-term loans. The first few years of payments on bank or finance company loans are applied mostly toward interest, and very little is taken off of the principle. Other disadvantages of long- term debts are closing costs, and insurance costs. Closing costs for long term loans are usually between 3 to 6 percent of the loan total.  Additionally, borrowers are often pressured into buying unnecessary life or disability insurance for individual loans. These insurance charges are taken out of each monthly payment, reducing the amount of money that could be applied to the loan principle.

Ultimately, payday loans are a great option for those who need money fast, and are able to pay it back when it is due. Emergencies happen all the time, and people with little excess cash need options. They might not want to go through the hassle and wait involved in acquiring a bank loan. Sometimes people are not eligible for traditional loan anyway. In summation, payday loans are a great option in the right situation.

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