According to the CFPB, an estimated 12 million Americans take out a payday loan each year, with the market set to grow to $43.6 billion worth of loans by 2028. With so many people looking to take out these types of loans, it’s worth exploring some of the reasons as to why you should look to get a payday loan if you are in need of emergency cash immediately!
Why Should I Get A Payday Loan?
1. Access To Same Day Loans
Payday loans are now very accessible if you are looking to borrow money online. With a traditional loan, most people would have to go through a lengthy application process to be approved.
With payday loans, many sites now offering a broker service, such as Finger Finance, which connects an applicant to a panel of direct lenders, meaning applying for a payday loan can be done in less than 5 minutes with the money entering your checking account as quick as on the day or the next working day. This is great for individuals who require same day loans and need to borrow money instantly.
2. Bad Credit Accepted
According to Experian, 16% of all Americans have a FICO score in the very poor range of 300-579. With the current population of the US totalling approx 336 million, that means almost 54 million American citizens have a bad credit score. Because of this, getting a loan of any sort from a traditional bank can be difficult, as credit score is one of the main factors that banks will look at when it comes to affordability, but with online payday loans, other factors are taken into consideration such as age, income, current employment and location.
Because of this, more people are turning to payday loans when they are in need of a short term loan for expenses such as medical bills, funeral costs, or even a tax refund cash advance for those who have overpaid on their tax and need a loan to cover the time before the overpaid tax is refunded. These types of loans do come with higher fees than a traditional bank, but are much easier to access and can really help out in difficult situations.
3. Unsecured Loans
Payday loans are a type of unsecured loans, meaning that they do not require collateral against them like car title loans, where a lender can repossess your car if you cannot pay back the loan you took out against your vehicle. Because of this, payday loans are in fact not as risky as people might think.
Most payday loans do come with a high APR compared to most bank loans, but as long as you understand the repayments that need to be made and are not late on your payments, your credit score is unlikely to be affected and you will be able to receive financial aid when you most require it.
4. Short Term Impact On Your Financial Situation
A positive about most payday loans is that they are usually taken out over a short period of time, as little as a few days to a few weeks. Because of this, an individual’s financial situation isn’t going to be affected long term as long as they can afford to make the repayment of the loan along with the interest.
In this example, a payday loan is quite a bit safer than that of an installment loan, where a loan amount is taken out over a much longer period of time, in some instances up to 60 months! Of course, this does mean that the monthly repayments are lower than that of payday loans, but if financial circumstances change, it could be much riskier than a short term loan.
5. Payday Loans Are Available 24/7
Because you can access payday loans online at any time of the day or night by filling in a quick and easy application form, it makes this form of loan much more easy to access than a traditional bank loan.
Sites such as Finger Finance have an application process that takes less than 5 minutes and sends you details to several direct lenders who will then present an instant decision on your computer screen with the best provider based on your criteria.
Are There Any Disadvantages To Payday Loans?
A payday loan is in theory no different from a regular bank loan in the sense that if you fail to make repayments on the loan, you will be charged interest on the total balance and your credit score could be negatively impacted. Payday loan rates and terms also differ from state to state such as California or Kentucky, so make sure you know what the regulations are in your state before applying.
However, payday loans as short term solutions offer benefits such as quick access to cash, eligibility for individuals with low credit scores, and no need for collateral such as your car or home to be used when taking out a loan.
If you are looking to take out a payday loan, make sure to do your research first. This will help ensure that you are able to pay the full loan amount back in the period of time you decide to take it out for.