Living a life that is free from loans is perhaps the best thing that could happen to anybody. But in reality, this does not happen to almost a vast majority of people. This is because of a few obvious reasons. First and foremost it has to be borne in mind that most of us are salaried persons with fixed incomes. Hence, the chances of saving significant amounts of money are very limited and even if we save it, we do it keeping the long-term perspective in mind. Hence, once it comes to sudden and unexpected expenses we are found wanting and have to depend on borrowings to tide over such difficult situations. Towards this objective, there is no doubt that payday loans are considered to be very useful and dependable solutions. Let us try and find out the various advantages and shortcoming as far as these loans are concerned and then take a final call on it.
Advantages Of Payday Loans:
Now let us look at some of the advantages and benefits associated with payday loans by looking at its features and uniqueness. First and foremost most payday loans are convenient and simple to apply for an unsecured loan. If you have a sudden need for funds and do not have any big collateral to fall back upon these loans can come in very handy. The borrowers often do not ask for any mortgage or big collaterals. The only thing they want is a steady job with a decent income that is big enough to enable the borrower repay the loan. The loan amounts are small and hence the borrowers are also comfortable. Lastly, the entire process of applying, evaluating, approving and disbursing the loan is done quite efficiently. In most of the cases, the payday loan companies will credit the borrowers bank accounts within a few hours or within the same day.
Disadvantages And Shortcomings:
Like all financial products when it comes to payday loans there are certainly some shortcomings and disadvantages. The biggest disadvantage is that it is a highly enticing and luring loan product. So, if as a borrower you are not disciplined and prudent, you could end up borrowing such loans from three or four lenders and find yourself in a big problem. Since the interests rates are very high, you could literally find yourself in a debt trap not knowing how to get out of it. Furthermore, there could also be some hidden costs which you might come to know only when the loan has been credited to your account, make sure you ask for these before borrowing.
The Final Takeaway: When we do a careful comparison between the advantages and disadvantages of this type of small loan there are reasons to believe that it can be a very useful short term unsecured borrowing, provided the borrowers know where to draw the line. The exercise of discretion and understanding the products and its finer nuances is very important. If these are followed and if an informed decision is taken, it certainly is a very useful lending service.