Payday loans are a great option for those who need cash quickly but cannot get a traditional loan from a bank.
However, there are some downsides to this type of short term loan that you should be aware of before signing on the dotted line.
Find out the pros and cons of using an online payday loan so that you can make an informed decision about whether or not this type of financing is right for you.
5 Pros of Using an Online Payday Loan
1. Ease Of Application
One of the biggest pluses of using an online payday loan is the ease of application. You can get an approval in just a few minutes and get your money in your bank account immediately. There is no paperwork, no long forms to fill out, and no waiting around for days or weeks for a lender to decide if they want to give you money.
2. No Credit Check
Another pro of using an online payday loan is that there is no credit check. This means that even if you have bad credit, you can still get a short term loan with no hassles.
In most cases, when you apply for a payday loan through an online lender, you will receive your funds the same day that you provide the lender with the details on your paycheck. This means that you can use the money for whatever you need it for without having to wait around for the lender to verify your employment and income.
4. Instant Approval Decision
If you are approved for a short term loan within just a few minutes, then you know that you are definitely going to get the money that you need. There is no delay or hassle when it comes to getting cash.
5. Easily get a Loan Online with a Mobile App
Open Appstore or Google Play Market, do a quick search, choose the cash advance loan app you like and install it. Then, open it and follow the prompts.
You will be asked for basic information such as your name, address and phone number. Then, the lender will run a quick credit check and, in some cases, they may ask that you send in a copy of your most recent paystub.
Next, they will give you an immediate decision and, if you are approved, they will deposit the money directly into your bank account. It’s that easy.
4 Cons of Using an Online Payday Loan
1. High Interest Rates
There is no way around it. Payday loans have very high interest rates. The average APR is around 400%!
There are some states where the interest rates are even higher. In those states, the interest rate on a payday loan can go as high as 1000%.
No matter where you are located, the interest rate on a short term loan will always be much higher than what you would get from a traditional bank. However, the convenience of using an online payday loan often makes up for this disadvantage.
You may be willing to pay a higher interest rate in order to get the money that you need quickly, but be aware that most online lenders charge high-priced fees for using their services.
2. Small Amounts
You can only borrow a small amount with an online payday loan. For example, in most cases you can only borrow up to $1000.
This means that if you need more money, you will either have to go back to the drawing board or you will have to find another way to get the cash that you need.
3. Unsafe And Unethical Conduct By Some Lenders
Be very careful about which lenders you do business with. There are some unethical and even illegal online lenders out there who will stop at nothing to get your money.
These scammers advertise low rates and/or high-pressure tactics in an attempt to steal your money.
4. Possible Debt Cycle
If you use a high-priced lender and continue to use that lender for several months or years, you may find yourself in a debt cycle where you keep borrowing from that lender over and over.
This can lead to a vicious cycle of never being able to escape the debt because the interest rates are so high.
Conclusion: As you can see, getting a payday loan online has certain pros and cons. The question is: Are payday loans worth the risk? It is your choice whether or not you want to take a risk and get one.
This is a decision that you will have to make if you need emergency cash, and you need it fast.