Payday loans have been a controversial topic for quite a while. On the one hand, they are the only source of loans for people with bad credit scores, and on the other hand, their interest rates are much higher than the traditional loans. They have both advantages and disadvantages, but the truth is most people don’t know much about same day loans. If you want to learn more about them, make sure to read the information below.
What is a payday loan?
It usually is a small amount of money loan (typically between $100-$1000), which you’re supposed to pay off within two weeks in one go, once you receive your paycheck.
Advantages of same day loans
Contrary to popular opinion about them, same day loans have some pros. One of them is for sure easy accessibility. Even people with very bad credit scores can be sure that they won’t be rejected. Besides, you can get them both in traditional stores and online. It’s especially convenient because some lenders offer their services 24/7. That’s why you’re able to get money when you need it, and usually, the waiting time is no longer than a few hours. After that time, the money is already in your bank account. The next convenience of payday loans is the fact that there are very few requirements.
All you need to have is a bank account, ID or Social Security number and regular source of income. If you’re above 18 years old, then it’s doubtful that your application won’t be approved.
Disadvantages of payday loans
So, you want to get a loan on the same day. There are very few requirements, people with bad credit scores can get it, what’s the catch then?
It’s all about high-interest rates, which are, on average, 400%. It’s a gigantic sum; for example, the majority of personal loans will cost you between 5% to 35% interest. It often happens that people who are taking two-week loan terms are stuck and fall into a debt trap, which is always a stressful situation.
Getting the same day loan is often the only way to get out of trouble. It’s hard, but you should try to improve your credit score so that you can get loans in better conditions. If you want to learn what affects your score, take a look at the infographic provided by Realistic Loans:
Interesting related article: “What is a payday loan?“