One of the key advantages is the lower criteria and fewer requirements that are needed for payday loans. Borrowers with bad credit records that would most definitely be rejected by banks and other institutions, are still likely to get approved for an online payday loan. The requirements that need to be met are usually very loose and almost every person with a steady income is eligible for this type of loan.
Many lenders and loaning networks are available online, thus contributing to a wide variety of offers for borrowers to choose from. But other than the wide variety to choose from, online loans are also very convenient to apply for. Unlike traditional loans, you can apply for an online loan through a simple form in just a few minutes. And the fact that you can do this from the comfort of your home, without having to travel to a bank or other institution makes the whole process even easier.
In addition to the fast and easy application, the time it takes for an online payday loan to be processed is also significantly shorter compared to traditional loans. Once you get an offer that you choose to accept, the money can be deposited into your account as soon as the next business day.
As an alternative to traditional loans, online payday loans don’t require any type of collateral. When applying for https://yourloansllc.com/personal-loans-pa/ a loan, banks and other high street lenders might require a stake such as a vehicle or real estate as a safety precaution in case the borrower is unable to repay his debt. Payday loans on the other hand don’t require risking any personal property.
Since lenders have only a shortlist of information to review, they can easily decide whether they want to offer you a loan or not
Even though an online payday loan can look like an easy and convenient solution to your money problem, this type of lending also has some significant downsides. This type of lending isn’t always the best option and could result in making a bad financial situation worse.
Since these types of lenders have very few requirements, they offer loans to people with bad credit scores and do not ask for any type of collateral to secure the loan – they often balance their risks with high interest rates. With high interest costs, it is often very hard to repay payday lenders, and perhaps best to refuse such offers.
Failing to repay a payday loan will most likely lead to asking for an extension of the loan, or even taking out another one to be able to repay the first one. In both of these scenarios, the interest costs will grow, and you’ll get caught up in an endless debt cycle. Considering the simplicity of applying for a new payday loan you can enter a debt spiral without being fully aware of it.
Continuous Payment Authority or CPA is often requested by lenders. It’s a feature that allows them to take repeated payments directly from your account up to a specific amount (the total debt amount), whenever funds are available. Even though you can cancel their authority at any time, this feature is often considered a bad practice and can result in additional bank charges.
Conclusion
An online payday loan can be a quick and easy solution when it comes to short-term money problems. With the advancement of loan networks, these solutions have become widely spread out and very easily accessible, no matter the problems you’re experiencing.
Whether you’re still deciding, or have already decided to take out a loan, we strongly recommend that you always explore all of your options and educate yourself in financial terms. Bad Credit Loans and CashUSA offer educational content that will help you make a well-informed decision on a loan, while MoneyMutual has tons of resources that might help you learn how to better manage your finances.