Payday Loan-A Boon To Cash Crunchers

Payday loan generally referred as cash advance is a sum of amount lent in advance, which is of high interest rate relative to any other loan like installment loan. Here the borrower has to pay the lender, the Principal amount plus fees during his/her next wage. This type of loan is usually offered by the loan agencies and it does not require any collateral. However the following month salary acts as a security. There are pros and cons that come along with any type of loan.

Pros:

Easily available: Lenders are located throughout the cities. These days’ online payday loan services are available without ever having to leave the comfort of home.

Fast processing: Requires filling up an application either online or at agency, and can have cash in minutes.

Easy approval: No collateral or bank credit score is needed. All it requires is a proof of income, valid contact number, and active account in a bank.

Cons:

High interest rate: Interest rate is over and above. However it is compromised as it is readily available when needed.

Addiction: Since it can be acquired again and again once the paycheck is made, care must be taken not to make it cyclical habit.

Scam lenders: Care must be taken in finding a reliable lender and the terms and conditions they put forth.

Distinctive aspect of payday loan: Payday loans are distinguished from installment cash payday loan in many aspects.

Some of the features are:

Sum of amount secured is smaller and are offered by small financial agencies.

Available for short term policy only and are paid back in 30 days.

Mode of payment is by postdated check; whereas installment loan is paid using cash or cheque each month.

Requires fewer formalities to get qualified for payday loan.

Structured in such a way that it can be rolled over or renewed.

Payday loan lenders collection process vary from state to state and it is either permitted or prohibited based on the laws in the respective state. This type of loan comes helpful when a person’s monthly budget drains off.

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