One of the best ways to meet an urgent financial need is a payday loan. This loan can be helpful in covering unexpected expenses just before payday and in avoiding penalties from late payments. As you can glean from the term, a payday loan is paid on your next payday, meaning your debt is only good for a few weeks.
Besides that, there are other significant advantages offered by a payday loan in comparison with a traditional loan.
When you apply for a payday loan, you will get feedback – positive or negative – almost immediately after filing your application. You need fill extensive forms as conventional loans require. In most cases, you will receive your loan within the day or at least on the following day, depending on whether or not you have complied with all of the lender’s requirements. Lenders strive to maintain a high speed of transaction to remain competitive.
All payday loan transactions are conducted online. You need not see a loan officer in person or keep inquiring about the status of your application. As long as you are online, you can transact with a payday loan provider whether you’re at the office, at home or wherever. With a conventional lender, you have to talk to your loan officer personally several times. One advantage of a payday loan compared to a credit card is that you will receive your credit in cash, allowing you to spend it in any manner you want.
Fewer, Simpler Requirements
A payday loan is easier to access because the requirements are fewer and simpler. The most crucial requirement, for example, is a steady and adequate income; traditional loans, on the other hand, will require collateral at the same time. A payday loan doesn’t need collateral. Provided you can prove that you have a stable income that can pay off the money you borrow, you’re all good. Other usual requirements are proof of your permanent resident status in your state and an active checking account. You should also be above 18 years old to apply.
Most payday lenders put a limit to how much you can borrow as a first-timer. After that, the lender will increase this limit so you can borrow a bigger amount next time, of course depending on your salary and the lender’s policy.
Less Risk to Your Credit Rating
Lastly, because of its short repayment period, a payday loan may seem disadvantageous, but the opposite is actually true if you think about protecting your credit rating. With a typical loan, you have about one to two years to pay off the cash you loaned. But no one knows what could happen within that period. You can get sick, lose your source of income and so on and so forth. A payday loan is paid right on your next payday, and that will be it. Clean again.