Why a Payday Loan May Be Right for You
Apply for a Loan
Secured with SHA-256 Encryption
UPDATED: Jun 7, 2012
Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.
The country is currently going through hard times given its dismal job opportunities and slow economic growth. The ongoing recession makes it difficult for many people to pay for basic living expenses in addition to timely monthly payments on their homes and cars. Given the times, more and more people are seeking assistance from payday loans.
A payday loan is essentially a cash advance that is secured by a borrower’s post-dated check or by electronic transfer. A payday lender will hold a borrower’s post-dated check until the borrower’s next payday. Once that day arrives, the payday lender will deposit the check and claim their money unless the borrower extends the loan through a practice called “rolling over.”
This short-term financing option is how some people are able to make payments on time, avoid mounting debt, and prevent additional fees derived from late bills.
There are a number of reasons a payday loan may be the right fit for a potential borrower.
First, unexpected expenses may arise at the most inopportune times. Car accident expenses, funeral expenses, or sudden medical expenses are just a few of the reasons that a payday loan may be sought out. These loans make it easier to get by to the next month since they indiscriminately provide cash to virtually anybody with a checking account.
Second, unlike most traditional loans, which can potentially take days or even weeks to receive approval, a payday loan allows a borrower to have cash in hand in less than 24 hours.
Finally, not every borrower has excellent credit, nor does every borrower have valuable assets that can be used as collateral for traditional loans. Borrowers with poor credit and no collateral are able to qualify for payday loans since this financing option doesn’t have a credit requirement or security requirement outside of a postdated paycheck. Due to these relaxed conditions, payday loans are the only type of loan available to some borrowers.
One drawback, however, is that payday loans can increase in amount dramatically over time, which, for some, can lead to perpetual indebtedness. But assuming borrowers have a plan to repay their cash advance by their next payday, these short-term financing opportunities are a great way to come into quick money at a moment’s notice. Borrowers who believe they can catch up on their finances by the time payment is due may reap the benefits from payday loans without worrying about their potential drawbacks.
For borrowers not quite convinced that payday loans are right for them, there are other alternatives. One such option is applying for small loans from a financial institution like a bank or a credit union. Unfortunately, however, small loans from traditional lenders often come with much more stringent qualification requirements.