With the shaky economy, a loss of work hours or your job, and rising expenses, many people who once had great credit find themselves in a position where their credit is less than ideal and in many cases may actually be bad. You tell yourself that everything will be all right, you just have to make it through and then the unexpected happens.
Your car suddenly needs major repairs or someone in your family gets ill or dies and you have to make an unplanned trip. You simply don’t have the money to pay for this unexpected expense and with your bad credit you are at your wits end as to where to borrow the necessary money to meet this emergency. Providing that the amount you need is too much there may be a simple solution to your problem. It’s what’s known as pay day loan.
What is a Pay Day Loan and How Does it Work?
A pay day loan is an extremely short term loan based on your paycheck. In fact, some places call such loans pay day advances. The loans are usually for no more than two weeks and are generally for a small amount of between $50.00 and $500.00 with about 15% tacked on for interest. While the interest is quite high there are cases where paying the interest may be worth it as these loans are extremely easy to get quickly which is important if you need the cash now.
What happens is you write a post dated check for the amount of the loan plus interest in exchange for the money. In some cases you authorize an electronic deduction from your bank account for the day the loan is due. In exchange, the place giving the loan usually gives you the cash in hand or deposits the money into your bank account within 24 hours.
Advantages of Payday Loans
Payday loans do offer certain advantages for those needing a small loan who need the money immediately. There is no credit check and none of your personal information is sent to anyone else. You can apply in person, by phone, or even over the Internet. It usually takes less than 20 minutes to apply and there are no initial upfront costs. In addition there are plenty of pay day loan places scattered all over making these places easy to find. Even if there is not a place offering payday loans near you there are many places online that will give you the loan.
This all results in saving the stress and worry about whether or not you will be able to secure a loan and also results in you getting the money faster so you can meet the emergency and move on. There is also the added advantage that if you find you can’t pay off the loan on time that most places will roll the loan over for an additional two weeks.
Disadvantages of Payday Loans
There are of course disadvantages to getting payday loans. One disadvantage is the high interest rate. While this may be worth it in order to get the money quickly if you can’t pay off the loan on time and have to roll it over the interest can soon become higher than the actual loan itself. Another disadvantage is that the loan can not be paid off in installments but, must be either paid off in total or rolled over adding more interest to the loan.
Exploring Other Options
If you have the time to explore other loan options that may have lower interest rates or better terms you might want to go ahead and explore them. However, few other options allow you to have receive the money you need as quickly as pay day loans and in cases of a real emergency where cash is needed immediately these loans can provide a quick solution for anyone regardless of how bad their credit history is.
While pay day loans may not be something that we would choose to use unless absolutely necessary it is comforting to know that when you need a small loan for an emergency there is somewhere you can go to get the money you need quickly and without hassle.
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