Why Payday Loans Are Worth It
      Posted at Sep. 30. 2011. with No Comments

      get a payday loanA pay day loan, also known as a paycheck advance, is a short-term cash loan that is usually repayable on the borrower’s next regular payday. The amount of the loan varies depending on the lender, the borrower’s needs and how much money the borrower makes. Pay day lenders rarely require a credit check. Applications for paycheck advance loans can be made in person, over the phone or online. If approved, the money is usually deposited into the applicant’s bank account within 24 hours of applying for the loan.

      Reasons Why Pay Day Loans Are Popular

      Since the financial downturn, a number of people have had difficulty maintaining a good credit rating. This means many hard-working Americans are unable to qualify for a bank loan, line of credit, or low-interest rate credit card. When unexpected emergencies hit, it can be difficult to come up with cash quickly to pay extra bills. Unplanned expenses like emergency car repairs and medication that is not covered by insurance are stressful for families with limited resources. Many Americans are now choosing paycheck advances as a way to deal with financial emergencies. Some of the reasons why these short-term loans are popular include:

      • The application process is quick and easy, and a credit check is rarely needed.
      • Approval can occur within one business day.
      • Successful applicants receive the cash either in person or directly deposited into their bank account.
      • The amount of money offered by a lender depends on the income of the borrower.
      • Pay day loans are a good alternative to borrowing money from family and friends, or pawning items.
      • A short-term loan is often cheaper than paying bank overdraft fees and overdue account fees for utility bills.
      • Some borrowers use payday advance loans as a way to protect their good credit score by using the loan to pay revolving credit accounts on time.

      Overdraft or Pay Day Loan?

      In his guest post on LendingClub.com, NerdWallet CEO Tim Chen discusses why a pay day loan is a better financial choice than using bank overdraft protection. Chen points out that many banks charge a $35 overdraft fee plus extremely high interest rates, making it costly to use a bank overdraft. Chen also included this link to a short-term loan calculator, so borrowers can calculate the APR (annual percentage rate) on a paycheck advance loan to help them decide if this is the right type of loan for their needs.

      Emergency Planning With Pay Day Loans

      For many people, the security of being able to access a short-term loan when they experience a financial emergency is an important part of their money management strategy. These loans can be worth it for borrowers who need quick cash to pay for unexpected expenses like emergency car repairs, or to avoid high overdraft fees at their bank. Some people find peace of mind in knowing that they can use a pay day loan in an emergency to take care of their family.

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