It is a tale as old as time, you are living your life as you are wont to do. Maybe you’re on your way to work, and suddenly your car craps out.
All was perfectly fine a few seconds ago, but now you need to shell out five hundred big ones or risk losing your job because you can’t make it to work for a while. Of course, this is the fault of the United States’ shoddy public transportation system and not you. Be that as it may, you need to shell out cash and fast. Luckily, payday loans can come to the rescue.
What are Payday Loans?
In the example outlined above, we mentioned the possibility of your car breaking down, but that’s not all a payday loan is for. Whether it’s a medical emergency or some other urgent expense, so long as you need an amount of money under a thousand dollars within a short time period, which you know you will be able to pay back given a certain amount of time, then a payday loan is for you.
Initially, a payday loan had to be paid back by your next payday (essentially within a maximum of 31 days) but now it’s possible to see payday loans that can be paid over as much as six months. It all depends on whatever agreement you and your lender can come to. However, that’s not the best part about payday loans.
No Hard Checks
The problem with the current system of lending and borrowing in the United States is that it punishes those that are less well-to-do and makes it easy to fall into a debt trap you might never be able to escape from.
If you don’t spend enough, you can’t have a good credit score. If you have a bad credit score, you pay higher interest rates which makes it harder to pay your way to a good score and so on.
That’s why payday loans are so advantageous. With a payday loan, you don’t need to do a hard credit check that may affect your credit score. Instead, you can do a soft check that is needed to confirm your identity.
This way you aren’t denied a loan simply for having a bad credit score. However, lenders might charge a higher interest rate than the average bank; that’s the only way they can compete with the banks. That’s not all though.
Payday Loans have High Acceptance Rates
With payday loans, lenders are more concerned about your current ability and willingness to pay than your credit score. Hence, they have a high acceptance payday loans rate. While they need to confirm your identity, address, sources of income, etc, so long as you demonstrate an ability to pay, you will probably be able to get a payday loan.
In conclusion, payday loans are not without their disadvantages, such as high-interest rates. However, they remain a gift to the common man in need of urgent, short-term loans,