Are you looking for an emergency loan? An instant payday loan can offer quick access to credit to finance immediate personal or business needs. However, there is a risk of being trapped in a debt cycle when one borrows without a plan. In practice, a payday loan is a small amount loan given with a short-term repayment date, usually repayable on your next payday. The following pros and cons of an instant payday loan can help you make an informed borrowing decision.
Pros of Instant Payday Loans
Easy to Access
The primary advantage of instant payday loans is that they are very accessible. In this case, one can access the loans within a day, at any time of the day, all week. More so, the borrower does not have to apply physically, as online applications suffice. In addition, the application process is straightforward. Thus, compared to traditional loans, instant payday loans are ideal for responding to an emergency.
Instant payday loans are unsecured loans. Typically, the lenders will not ask for any property title to act as collateral for the loan, making borrowing easier. The lender will use a Continuous Payment Authority on your bank account as the precondition for the loan. Again, there is the threat of debt collection or court proceedings for defaulters. Thus, if you default repayments, your property is not seized.
One of the biggest hurdles for any borrower is navigating through the requirements. Often, traditional lenders keep a long list of requirements to prove identity, demonstrate income, and confirm credit history. In comparison, instant payday loans only require you to be of legal age, have a government ID, a bank account, and a regular source of income. In this way, instant payday loans have an easy application process.
Credit History Check
Traditional lending institutions are very keen on checking the credit history of the borrower. Ordinarily, the lender will contact the credit reference bureau to access your credit history. Then, the lender uses negative or low credit history as a basis for rejecting or reducing your loan. In contrast, most instant payday loans do not require a good credit score. The lenders may not conduct a hard credit inquiry as the loans are processed fast.
Cons of Instant Payday Loans
The most significant difference with instant payday loans is that they attract high interest rates compared to other loans. More so, such loans have a short repayment schedule and require a lump sum repayment. Thus, you should have a proper plan and borrow what you can afford to repay. In this way, you can avoid being caught in a debt cycle or having constraints meeting your other monthly expenses.
Ultimately, the decision to take an instant payday loan varies with your financial situation. In case of an emergency or unexpected bill, instant payday loans can ease your life. However, the easy access and convenience of instant payday loans do not negate the rationality of borrowing within your means.Share