Payday loans are pretty popular and they can come quite handy in time of dire need. If you have some emergency intervention concerning health or house repairs and you are short of cash, these loans are just ideal. Downsides are also numerous and these loans should be treated with utmost care since they can cause a lot of trouble. First of all, let’s see what these payday loans are in fact.
These are extremely short term loans which have narrow payoff time frame and that makes them tricky to handle sometimes. Also these loans involve very limited amounts of money and that makes them unsuitable for any larger transaction. If you need more than $1000 you will probably have to look elsewhere for the money. Still, for such small amounts these loans are always available. One of the good things concerning these loans is that you don’t need your credit rating to be checked. The money is available no matter what your credit status is. The other handy feature is that these loans are approved in record time. All of the paperwork and formalities are done within 24 hours so this is pretty quick way to obtain some cash. It doesn’t come without price though, since the interests on these loans are pretty high. They vary from 15% to 20% with expenses included and that is not small amount of money. For example, if you loan maximum of $1000 you will be returning $1150 to $ 1200 in just few weeks time. That can prove to be pretty hard to pay back and it can lead to all sorts of further problems.
If you are just a bit late with paying off, it will result in doubling the quantity of money which you have to pay as the interest. It can quickly cause some serious problems and may turn out to be pretty messy. You can have huge debt in matter of months when all of it has started with small loan. So, the caution is more than welcome when you are considering getting one of these loans. Good side is that this can be solved with the help of your bank. Namely, it is possible to authorize the company issuing the loan to withdraw their money from your account automatically. This means that you don’t have to go to their office to pay back the money. They will simply withdraw it from m your account when your pay off is due. This method has one more large benefit. Namely, even if you don’t have enough money on your account they will be able to withdraw it. It will send your account in to overdraft but the bank will make you much less problems than the loan company would. Also, the penalty you will have to pay to the bank is much lower than another set of interests plus expenses in the loan company.
We may conclude that payday loans are handy, but that their downsides must be considered properly in order to avoid any trouble.