Do you know that online payday loans have grown at an extremely high rate? This conclusion comes from the number of people who cannot survive till the next paycheck. Research shows that millions of people cannot cater for an emergency of $500. And that shows how they are desperate to get fast cash.
What are Payday Loans?
Any loan that you pay after two weeks is a payday loan. The interest rates of payday loans are usually high, starting from 391%. However, an online payday loan can help you sort out your emergency since it quickly applies.
Instead of walking around looking for a short-term loan, you can search for them on online sites, and you will get the cash you need. First, however, you need to be sure that you will repay the loan on the agreed time. Otherwise, you will get into a cycle of debts.
With the high-interest rates, it’s easy to keep rotating on the same spot, pay the loan, and apply for another one. However, research shows that 80% of payday loan borrowers do not pay the loan after 16 days. Therefore, the lender doubles the interest, making it challenging to repay the loan in the end.
The Features of Payday Loans
They are Short-term in Nature
Do not expect to get a payday loan to repay in the next five years. Payday loan lenders expect you to repay the loan after 16 days. That’s why you should have a stable source of income before applying for a payday loan.
Suppose you don’t repay the loan at the agreed time. What happens? The lenders will automatically double the interest, making it tougher to repay the loan in the end. That’s why you’ll find that most defaulters have taken payday loans.
The Loan Limit is Usually Low
Again, don’t expect to get a payday loan to buy a car or a home. That won’t happen because you cannot get more than $5000 as a payday loan. And that’s too low to make a more significant purchase.
In addition, the payment terms do not permit you to take a considerable amount of payday loan. For instance, please tell me where you will get cash after two weeks to pay a payday loan exceeding $10,000. That loan amount can only work well with installment loans.
The APRs are Usually High
I have not seen an expensive loan like a payday loan. Can you imagine paying an APR of more than 391% after two weeks? It happens with payday loans, and that exceeds the standard loan APRs.
However, no matter how expensive it is to get a payday loan, millions of people take a payday loan each month. And a good percentage of them do not pay the loan after 16 days, making the lender double the interest.
They are Usually Unsecured Loans
When taking a payday loan, you don’t need to provide collateral for the lender to approve your loan. Instead, once you prove that you can afford to repay the loan, the lender gives you the loan faster.
That’s why most lenders need you to have a stable job before getting a loan. In most cases, the lenders deduct their money automatically once your paycheck reflects in your checking account.
They are Fast Loans for Emergency Needs
Do you feel that you cannot survive till the next payday? Well, payday loans can be of good help to you once you need quick funding. In most cases, payday loan lenders transfer the money to your account within a few hours.
For instance, Viva payday loans lenders give you a decision for instant cash loans online 24/7 Australia within two minutes, and they transfer your money within a few hours. Therefore, you can trust them to get a reliable loan in a short period.
Advantages of Payday Loans
· They are easy to apply
Due to the growth of Fintech, you can now access a payday loan with a few clicks on your mobile phone. Therefore, you don’t have to move from one store to another looking for payday loans.
· There are no credit checks
I usually call payday loans for those with bad credit scores because the lenders do not run credit checks. Instead, all they need is to know that you can afford to repay the loan.
· You don’t stay in debt for so long
If you take a lower payday loan that you can comfortably repay on your next payday, it’s simple to stay out of debt. Once you repay the loan, you don’t need to apply for another one if you are financially stable.
· Your paycheck determines how much you get
For instance, you cannot get a payday loan exceeding the amount of your paycheck. And that ensures that you don’t take loans that you cannot repay at your payday.
Payday loans are very costly. Therefore, you should ensure that you have exhausted all other options before settling for this one.