Payday loans can seem daunting when you don’t fully understand what they are and if they’re right for you. Once you fully understand them and the pros and cons, you can make an informed decision on whether or not they are right for your situation. If you’re looking for a reliable payday loan from an FCA regulated direct lender, try cashasap.co.uk. Read this blog for some information about payday loans, including the pros and cons to getting one.
What is a Payday Loan?
Payday loans are one of the two varieties of short term loans. These are designed so you can borrow money in an emergency and pay it back once you reach your next payday. This is done in one single repayment.
It is a loan designed to be taken out over a short period of time. Typically they are advertised as a means to fund unexpected purchases that arise a few days before the end of the month, when you are strapped for cash and waiting for payday.
Pros
1. Instant Cash
One significant benefit of payday loans is that they provide borrowers almost immediately. In some cases, you may receive instant approval and have the cash with you in less than 24 hours. This can be vital for anyone who is in a financial dilemma or emergency, which tends to be the case for people who are getting a payday loan.
2. Few Requirements
Criteria for payday loans often includes features such as needing to be in employment, over 18 and living in the UK. Other loans are more likely to require more information and background checks, whereas payday loan are more lenient as they are for those in need of a fast loan. It does, however, still need evidence that you will be able to repay the loan.
3. Convenient
Possibly one of the most important pros of payday loans is their convenience. When you are looking for a payday loan it’s because you are in need of money fast, and they are the most convenient way to do this. You can apply for a payday loan online in the comfort of your own home and hear back pretty fast, with money coming in soon after you’ve been accepted.
Cons
1. Expensive
Due to their convenience and fast turn around, payday loans have high interest rates. Although you get the money fast, it is always important to make sure you absolutely need the money urgently and cannot make it to your next payday before you take out the loan. In this case it is worth getting and paying the interest, though if it’s avoidable you should wait.
2. Short Repayment Terms
Payday loans are only for short fixes, therefore they have short repayment terms. Typically you will agree to repay the loan within a month, after your next payday. This means that you need to be absolutely sure that you will be able to cover the cost of the loan and the interest in the time you have to pay back the loan.
3. Can Impact Credit History
As with any form of loan, if you don’t make a payment in time it could negatively impact your credit history. Credit history is important in your financial life for future loans and finance, especially for large purchases such as a mortgage. It is important to keep a good credit score, so if you know you’re unlikely to be able to pay back your payday loan don’t take it. It’s not worth losing your good credit history for.
