At some point in life, most people will go through financial constraints due to utility expenses, tuition fees, a car breakdown, or a medical emergency. When this happens, one of the best solutions to consider is to get a payday loan at TimesUnion and receive the cash you need to rectify your situation.

Accessing a payday loan is preferred because, many times, your family and friends who can help you when in need of financial assistance might not be in a position to provide you with the needed cash.

But what are payday loans, and are they reliable? If you’re asking yourself such a question, look no further. Below is a guide detailing the pros and cons of taking out a payday loan online to know whether it’s an ideal pick for your needs.

What’s A Payday Loan?

A payday loan is high-interest and a short-term financial loan that a lender extends to you and expects to be paid back after receiving your next paycheck. Payday loans are also known by other names including;

  • Bad credit loan
  • Cash advance
  • Paycheck advance
  • Fast loan or fast cash
  • Short-term loan
  • Deferred deposit transaction
  • Payday advance loan

Payday loans have high interest because they often don’t require collateral, meaning the lender takes the bulk of the risk. To qualify for a payday loan, you simply need to meet the lender’s criteria. Many lenders typically don’t require you to disclose how you intend to spend the money. Instead, their focus is on whether you’ll be able to pay back the loan when you get paid.

Pros Of Payday Loan Online

Certain enticing reasons make payday loans an attractive idea, and this include:

Easy To Qualify For This Loan: The most notable advantage of payday loans is that they’re easy to qualify for because you don’t need any collateral. This means you need to apply online on your computer, laptop, or smartphone through a credit application form and fill out the required information quickly.

Payday loans, unlike traditional loans, also don’t come with strict qualification requirements, making them a lot easier to get.

The only proof the lender wants to see is your ability to repay the loan during your next upcoming payment. They do this by demanding basic qualification requirements such as proof of income, owning a checking account, and have attained the minimum age.

Quick Cash Approval: Another advantage of the payday loan is the prompt cash approval, with most lenders typically disbursing the cash within 24 hours. This makes payday loans an excellent choice if you’re in an emergency and in dire need of money.

On average, the approval process of a payday loan takes less than an hour, after which the funds will be disbursed into your account within 24 hours.

Fewer Requirements Compared To Other Loans: Getting traditional loans and other types of loans often come with many requirements to prove your ability to pay back the loan.

Luckily, this isn’t the case with payday loans, and the only requirements lenders require include;

  • Proof you’re at least 18 years of age
  • Own an active bank account
  • Have a social security number or government-issued ID
  • Employed and with a stable stream of income

Your Credit Score Doesn’t Matter: Before qualifying for a traditional loan, lenders typically first take a look at your credit score to gauge your eligibility. However, you shouldn’t worry about this when taking a payday loan because the lender’s focus is instead on your income to know how much money to lend you.

In fact, payday loans are usually intended for persons with poor credit scores hence why they have high-interest rates.

Cons Of Payday Loan Online

Despite its numerous advantages, there are a couple of disadvantages of payday loan online and this includes:

They’re Expensive – Payday loans have excessively high-interest rates because they’re meant for individuals with a poor credit rating.

Lenders do this because they’re aware there’s an increased risk of losing their money, which is further worsened by the fact there’s no collateral. Because of this, you end up paying considerably more for the loan when you get a payday loan online compared to any other type of loan.

Shorter Repayment Periods – After taking out a payday loan, you’ll be expected to repay it on your subsequent paycheck. However, this is often too short and you might find yourself unable to afford the loan.

If you opt to roll over your loan repayment date, the lender charges extra fees, further increasing the cost of this loan. When this happens, you can easily find yourself caught in a debt trap and find it very challenging to free yourself from clearing the loan.