Many people turn to short term loans in times of trouble, and it’s certainly clear to see why. There are many great benefits to getting short-term loans, and it has helped many working people to get out of difficulty during the month. Here are some of the main advantages and disadvantages of these type of loans.
One of the main advantages of payday loans is that it doesn’t matter how good or bad your credit rating is. This is what makes short-term loans such a great idea for people who aren’t able to get other types of loans, such as a bank loan or credit card. Since there are no credit checks when you apply, it becomes completely irrelevant.
Another benefit is that you don’t have to pay it back until your next payday. You can borrow money until payday and then pay it back when you get your pay check. This makes it easy for the borrower, since you don’t have to worry about making any repayments until the money is actually in your bank account.
People often apply for payday loans because of the speed at which the money is usually deposited into your bank account. Many people report receiving the money within 24 hours, and sometimes, it can take a matter of minutes.
Applying for the loans can also be very simple, and it’s usually just an online form which you are required to fill in. This normally takes no longer than five minutes, making it ideal for anyone who has a busy schedule and a job or family life to attend to.
The main disadvantage of payday loans is that the interest rates can often be rather hefty, which is why many people choose not to rely on these loans very often. Although you’re only borrowing them for a few weeks (or a few days), you can still accumulate large amounts of interest, and if you’re late in making the repayment, this amount can increase even further.
Finally, failing to repay the loan can affect your credit rating in a bad way. This means that if your credit score is already very poor, it could get even worse, making it more difficult to get bank loans and credit cards in the future and thus making your financial situation even worse. However, paying the loan back on time will ensure that your credit rating doesn’t get worse, and it might even get better.