Payday loans are the most convenient and easy to get approval for loans around. They require no credit check or collateral to be pledged to get the loan approved. Payday loans are guaranteed to be approved within 24 hours of applying. But is payday loans worth it? That is what we are going to find out in this article.
We all have faced financial problems that required quick cash to get us back on our feet from time to time. From fixed expenses like rent or utility bills to sudden cash crunch like urgent medical emergencies, we all need a loan from time to time. There are several options in the market available for you, like personal loans and installment loans, but in recent times, the most popular loan around has been payday loans. First, let’s look into why payday loans have been so popular among working-class people in the United States.
The popularity of payday loan
Their popularity is mainly attributed to the nature in which a payday loan is deployed. To be eligible, you do not require a whole lot of paperwork and documents. Here is a shortlist of things you will need to get a guaranteed payday loan approved.
Over the age of 18 and a citizen of the United States.
Proof of stable income
A valid bank account
These are all the requirements you will need when applying for a payday loan. Another reason behind the massive popularity can be attributed to the ease of getting a payday loan approved. These loans do not require any credit check, so that anyone can apply for a loan even with a bad credit score.
Payday loans have successfully solved a problem that stopped many working Americans to enjoy the benefits of getting a loan approved. In recent years, guaranteed payday loans have seen exponential success, yet many myths have slowly circulated around payday loans that we will try to address in this article.
Payday Loans have high interest rates.
This is probably the most hyped topic when it comes to payday loans. Many speculate that due to the ease of getting a loan approved and you need no credit check or have to pledge collateral, this must mean that the interest rates must be high given the high-risk factor the lenders have to go through. Like all good myths, fueled with many false information and misquoted press releases, marketers often consider payday loans as a dark evil entity that will suck every last penny from its lenders. I am sorry to disappoint you. This is no fairy fail, and the myth can not be further from the truth.
First, you have to understand the specific scenario a payday loan is designed for. These loans is not intended for long term use. They are quick guaranteed cash for your short term monetary issues, and they are designed to be paid in a month from your next paycheck. You can consider payday loans as cash advance loans. The main idea beyond payday loans is that you get the convenience of getting your paycheck in advance for your urgent financial needs. Many people fail to understand this and compare a short-term payday loan with a long-term loan.
So, what is the actual interest rates? This, of course, varies on the amount and time period you need the loan for. But a typical payday loan for $500 for a month will be around $40 – $60. Considering the immense value and ease a payday loan provides, this $40 premium is totally understandable. Think of it as instead of a loan, if you would have lent the money from a friend, he would possibly ask for a fancy treat, for two people in a decent restaurant in Las Vegas, Nevada, you would probably pay quite a lot more than the interest rates you pay on a payday loan. So, it is safe to say; these loans do not have unreasonable interest rates associated with them.
Payday lenders do not allow any extension.
This one is actually true. There are over 2300 payday lenders in the US, and some of them are very strict and do not offer any extension on loans. As we often say, the only thing you can predict in life is its unpredictability. There may be situations when paying off the loan might be difficult, and you may need an extension. We here at RedPayday Loans understands the issues and are fully transparent. You can pay a fixed fee and get an extension on your loan, although the myths are true for other lenders, but not pay paydayLv.
Payday loans destroy a credit score.
Many people believe that taking a payday loan will negatively affect their credit score. I was curious what made people believe in such a myth, and from my research, I found that many people consider taking payday loans a sign of failure. They think as they take a payday loan, financial institutions will flag their account, and their credit score will decrease. I get it; it is so easy these days to see your credit score fall, so the fear kicks in and such myths are born. But in reality, this can not be further from the truth. Instead, a payday loan can actually help you increase your credit score if you manage to pay them on time.
Payday loans are meant only for short term financial needs.
This one is true. Many people fail to understand that payday loans are only meant for a short term cash crunch. Due to the ease of getting a loan approved, many people misuse it and fall victim to not paying off their due on time. This severely dents the popularity of payday loans, as many people think it is due to the loan structure that makes it impossible to pay on time. In reality, the number one reason for not being able to pay off the loan is not using it for short-term purposes.
The advantages of payday loans are immense, but one must understand the use cases and should not use them for long term financial problems. For more details on a payday loan and to get a free quote, visit RedPayday website.