Not every emergency situation, credit problem, or debt issue is right for a payday loan, otherwise known as a cash advance or PDL. Payday loans are short term loans that give people with money upfront, but are required to pay the full balance within a couple of weeks, or until the next pay day. There are some benefits to short term loans, but there are also some points to think about before getting them to know if they are right for the scenario. The following data will go over some of the benefits to help people to know when is the right time to use payday loan service, and when they should not use them.
Pros of Cash Advance Loans:
* No credit checking is needed, and the financing terms don’t get reported to the credit companies so these loans don’t show up on credit reports. This is a good thing, but can also be a negative as it helps to be able to get a loan without using credit, but at the same time it doesn’t help a person’s credit either. If a person gets a short-term loan and pays it back on time, it will not improve the person’s credit score or history, but they also do not make any negative marks on a credit score if not paid on time.
* Approval is fast and easy with little more than a bank and account and id. These loans are secured using a bank account so all a person needs to get a cash advance loan is a bank account and they can get approval within hours without endless paperwork or reference checks.
* There a one-time fee for cash advance services and they do not charge installment payments or interest for these loans. Although they are required to call it APR, short term loans don’t have any installment payments, but rather a person makes one payment to the lender and pays the balance in full. The fee is capped in most locations, but check with local state regulations for the fees for payday loan services.
Cons of Cash Advance Payday Loans:
* Short term loans don’t improve credit history or get reported to credit companies. This means that these loans don’t help improve a person’s credit score.
* Short-term loans require the full loan balance to be paid back by the next payday, so unlike bank loans where a person is able to pay back the loan over a long period making small payments, these loans have to be paid back in full within a couple of weeks. This means that it’s necessary to only take what a person can pay back within the give period.
Right Reasons To Use Short Term Loans:
* Car repairs – Vehicles can go down at any time, and this can be a very stressful time for many people as they are not sure about how to get the repair done, costs involved, and how they will get to and from work. Having so many things to deal with at one time is hard enough, but being short cash on top it makes this situation perfect for payday loans. People can get the cash they need to fix their car today and get back on track without worrying about being short cash.
* Unexpected Bills – Ever get a traffic ticket, or other last minute expense that is quite large and throws a budget out of sorts. Paying tickets, or other surprise expenses is another good scenario for short term loans. These loans can get the cash needed today to make sure the expense doesn’t escalate more, making it tougher to pay back. Some expenses are very sensitive so making sure they are paid back on time is crucial and could be the right reason to get a short term loan.
* Not Paying Late Fees – Everyone runs into times when they are just plain short cash and not sure how they are going to pay their bills. The problem is many credit companies will charge late fees for bills not paid on time. These late fees can add up and make a whole other expense in themselves. Getting a cash advance loan to avoid paying late fees is also a good reason to use them. Late fees can be as high as $50 for just one bill, and that doesn’t matter what the amount due is and even if the person only owes a $25 bill, if they pay late they will be charged the same high fee. Getting one may be okay, but if a person has to decide between getting dinged by several late fees or paying a cash advance fee, they better choice would be the cash advance fee. The reason is that paying credit late not only charges you money, but reflects negatively on a credit report and can hurt a person’s credit score. Given a scenario of late fees and bad credit score over a cash advance fee, the better choice would be the cash advance loan and save the person’s credit history.
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