One of the best ways to meet an urgent financial need is a payday loan. This loan can be helpful in covering unexpected expenses just before payday and in avoiding penalties from late payments. As hinted by the term, a payday loan is a loan you pay on your next payday, so you will only be in debt for a week or two.
Apart from that, payday loans offer other advantages over conventional loans.
Applying for a payday loan, you will get a response, whether positive or negative, almost instantly after you submit your application. You don’t have to fill lengthy forms as you do with the usual loans. In most cases, you will receive your loan within the day or at least on the following day, depending on whether or not you have complied with all of the lender’s requirements. Lenders are always conscious about their speed of transaction because they know it gives them a competitive edge.
All payday loan transactions are conducted online. You don’t have to talk to a loan officer in person or call the lender several times asking for updates on your application’s status. Everything is done on the Internet, regardless of your physical location. Applying for a traditional loan involves a series of meetings with your loan officer. One advantage of a payday loan to a credit card is that you will get your credit in cash and spend it however you want to.
Getting a payday loan is easier because there are only a few basic requirements that you must satisfy. For instance, the most important requirement is that you have enough reliable income, while traditions loans often need collateral as well. Payday loans don’t need you to provide collateral. Provided you can prove that you have a stable income that can pay off the money you borrow, you’re all good. Other usual requirements are proof of your permanent resident status in your state and an active checking account. The common age requirement is 18.
If you’re a first-time borrower, a payday lender will restrict the amount that you can borrow. After that, the lender will increase this limit so you can borrow a bigger amount next time, of course depending on your salary and the lender’s policy.
Less Risk to Your Credit Rating
Lastly, because of its short repayment period, a payday loan may seem disadvantageous, but the opposite is actually true if you think about protecting your credit rating. If you apply for a regular loan, you have around one to two years to pay it off. But no one knows what could happen within that period. You may fall ill, lose your income source, and so on. You pay a payday loan right on your next payday, and that’s about it. You have been refreshed.