subject: The Pros And Cons Of Payday Loans [print this page] As with any other financial decision, there are certainly both pros and cons to payday loans. The difference between payday loans and other types of short-term loans vary, which means it is up to you, as the consumer, to remain educated and informed before taking out a payday loan or any other type of short-term loan.
Advantages of Payday Loans
Payday loan advances can be very beneficial to many individuals, and there are therefore many pros to them, including:
Payday advances can meet an individuals short-term financial needs by providing quick cash without a credit check. For many individuals, payday loans are the only solution to short-term financial needs, as they require no credit check. All other types of short-term loans, including personal loans and credit cards, require that an individual possess good credit. In other words, without good credit, many individuals do not have access to any type of short-term loan except, that is, for payday loans.
Payday loans are ideal for times of financial crisis. From a vehicle in need of repair to an overdue utility or rent bill or a broken furnace, payday loans can prove incredibly useful when individuals find themselves in a financial pinch. In addition, because individuals can secure online payday loans in a matter of hours, their convenience and practicality is often unsurpassed.
Payday advances require no long-term financial commitment. Because they are secured with an individuals paycheck, payday loans are generally short-term loans that are paid off within a short period of time, usually within a few weeks. Subsequently, individuals need not worry about long-standing bills and debt that must be paid.
Drawbacks of Payday Loans
Along with the many pros of payday loans come cons, and there are some cons to think about when considering whether a payday loan is right for you:
You should never use a payday loan to live beyond your means. A payday loan can be a very useful financial tool, but it should never take the place of smart financial planning. If you find yourself using payday advance loans to cover expenses that are beyond your means, then its time to rethink your household budget.
Payday advance loans can come with their share of interest rates and fees, particularly if you fail to pay off the loan in the agreed-upon time frame. For many individuals, much of the cost of payday loans comes from not paying off the loan and rolling it over. Instead, plan ahead and make sure you have the money to cover the repayment of the loan before you take out the loan.
Payday loan advances should not substitute good financial planning. In short, they are not the answer to long-term financial problems, and they should not be used as such.
Payday loan advances serve a useful purpose in the financial affairs of many Americans, particularly in these tough economic times. Many individuals, either disenfranchised by credit cards and bank fees or experiencing the consequences of bad credit, choose payday loan advances to cover their short-term financial problems.
