The Advantages Offered by a Payday Loan
A payday loan is one of the best ways to deal with a financial emergency. This loan can be helpful in covering unexpected expenses just before payday and in avoiding penalties from late payments. As you can glean from the term, a payday loan is paid on your next payday, meaning your debt is only good for a few weeks.
Besides that, there are other significant advantages offered by a payday loan in comparison with a traditional loan.
When you apply for a payday loan, you will get feedback – positive or negative – almost immediately after filing your application. You don’t have to fill lengthy forms as you do with the usual loans. The funds will be transferred to your account usually either on the day you applied or the day after that, and this will depend on whether or not you have provided all the required documents or details. Lenders are always conscious about their speed of transaction because they know it gives them a competitive edge.
When you apply for a payday loan, all transactions will occur online. You need not see a loan officer in person or keep inquiring about the status of your application. Everything is done on the Internet, regardless of your physical location. With a conventional lender, you have to talk to your loan officer personally several times. One important advantage of a payday loan to a credit card is that you can use your credit however you want, because it will come to you in cash.
A payday loan is easier to access because the requirements are fewer and simpler. For example, the main requirement is that you have a stable source of income, while traditional loans need you to put in collateral too. 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 an active checking account and proof that you are a permanent resident in your state. You also have to be over 18 years old to qualify.
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. A payday loan is paid right on your next payday, and that will be it. Clean again.