What is a payday advance and how does it work?
A payday loan is an unsecured short-term loan that is granted on the basis that the borrower will repay the loan with their next paycheck. There are a number of names for a payday loan, but regardless of what they call it, it’s a loan linked to the borrower’s payday. Unfortunately, you can run out of money for various unexpected and unforeseen reasons. You could be guilty of a poorly calculated budget or maybe you have an emergency that requires immediate attention and more funds than you have access to. Why you need the money isn’t as important as figuring out how to meet your obligations. If your savings have gone dry, you don’t have any open credit, but you have a job and a paycheck coming, a payday loan could be the solution.
What do you have to know about a payday advance?The most important thing to know about a payday loan is the high interest rate they usually carry. They are quick and easy to apply for and the lender charges accordingly for the quick delivery of the cash. Be sure to discuss the fees and rates with your lender prior to signing the documents and committing yourself.
When should you apply for a payday loan?You should only apply for a payday loan after you’ve exhausted all other resources or when you have expenses to pay for and no way to pay for them. Keep in mind that you are giving up a good portion of your next paycheck for this loan. So you have to make sure you absolutely need the loan.
Are there any benefits to payday loans vs other loans?The positives of a payday loan are the following:
- Easy to apply for and require minimum documentation;
- You receive money very quickly;
- The high interest is for a short-term loan and you won’t get locked into some never ending loan with high interest rates.