A payday loan is one of the best ways of raising quick cash to solve a financial emergency. The loan helps to pay for unexpected expenses or late bills before you get your salary. It saves you from penalties imposed on late payments. A payday loan is payable with the next paycheck, which means that you will only be in debt for a few weeks. Payday loans have various advantages over other types of credits. The 5 main benefits of payday loans are outlined below.
Most lenders approve applications for payday loans almost instantly when you provide the necessary information. The application process is simple and quick. You do not need to fill any lengthy forms, as is the case with conventional loans. It may take some hours for a lender to transfer the funds but you can get the funds on the same day or on the following working day. Some lenders transfer funds within an hour if you provide the required details fast. A large number of lenders in the market pushes lenders to offer quick services to remain competitive.
Conventional loans and credit cards take a long time to process. You will wait for several weeks before you can access funds, which will not help when you have an emergency. In addition, you are not guaranteed that your request will be approved. When you apply for a payday loan, you can receive feedback on whether your application was approved or not within an hour. Some lenders give instant feedback. In case your application is declined, you can seek help elsewhere immediately.
All the processes and interactions involved when applying for a payday loan are conducted online. You do not need to book an appointment with a loan officer or call your lender severally to get cash. You can send your application from your home or office. Getting a traditional loan involves several meetings with your loan officer. One advantage of a payday loan over a credit card is that you get your credit in cash. You can only purchase goods or pay for services with a credit card.
You can spend the cash you get from a payday loan on anything including paying your electricity bill or repairing your car. Most traditional loans are issued for a specific purpose. For instance, you can only spend a car loan to buy a car and home mortgage to buy a home or property. The paperwork involved is minimal. Sometimes you do not need to send any documents so there is no faxing, but some lenders will ask for proof of your income. You can fax the required documents within minutes.
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3. Few Requirements
Accessing a payday loan is easy because you only need to meet a few basic requirements. The most important requirement is a stable source of income. As long as your income is consistent and verifiable, you are almost guaranteed to find a willing lender. Traditional loans may require collateral. You do not need any collateral to get a payday loan. Your stable income is enough proof to the lender that you can repay the borrowed amount. Other requirements include an active checking account and registration as a permanent resident in your state.
You should also be above 18 years to get a payday loan. You probably meet these requirements if you have a permanent job. Conventional lenders ask for your credit score when you apply for a personal loan. If you have a poor credit rating, you cannot qualify for a traditional bank loan. However, you can get a payday loan with bad credit as long you can proof your ability to pay it on time. Online lenders will check your credit score but they base their decision on your current financial situation. Past financial mistakes or struggles do not limit you from accessing financial help whenever you need it.
4. You can Qualify for a Higher Amount
Many payday lenders limit the loan amount that new borrowers can access. You can only access an amount that is within your salary range and the lender’s range. When you pay for your first payday loan on time, your lender can increase the amount that can access in your subsequent applications. For instance, if you apply for $500 and pay it on time, your lender can increase your limit to $1,000 gradually depending on the lending policy and your salary.
The minimum and maximum amount that lenders give for payday loan depend on the laws in your state. Your lender will inform you of the amount you can get during the application process. Paying for your loan time enables you to establish a good relationship with your lender. You will always have a quick solution to financial emergencies.
5. Protecting your Credit Rating
The short repayment period for a payday loan may seem like a shortcoming but it is an advantage if you want to protect your credit rating. If you apply for an installment loan, you will have one or two years to repay the loan. Anything can happen within that time. For instance, you can lose your source of income or fall sick before you finish paying the borrowed amount. If you do not have an alternative source of income you will miss some installments as you look for another job.
Defaulting on your loan will worsen your credit score. You will also incur penalties and fines, which increase the cost of the loan. A credit card seems convenient but you have to control your spending to protect your credit rating. Most cardholders confess that controlling their spending is difficult. You may spend more than you can afford and worsen your credit rating, especially when you have more than one credit card.
A payday loan is a quick and convenient way of handling your financial emergencies. You can access cash within hours with bad credit and no collateral. You can borrow money for any purpose as long as you repay with your next salary. However, you have a legal obligation to pay the borrowed amount on time to avoid penalties and lawsuits. Most state laws restrict lenders from renewing or extending payday loan. Paying your loan on time does not only protect your credit rating but also enables you to qualify for higher amounts in the future.