The concept of pay day loans arises out of the fact that most Americans undergo financial crisis during the end of the each month and they are severely in need money during this period. Payday loans usually help people to meet such unforeseen expenses till the time you receive the next pay check, when you can afford to pay back the debt.
Payday loans usually come with a very high interest rates and can be availed by anyone with a checking account. For availing a payday loan all you need to have is a permanent source of income. However, the pay day loans are mostly used by people who do not have a credit card account and so mostly people with a very bad credit score or people having no credit history at all take recourse to such type of loans.
The basic advantage of pay day loans is that it is very easy of access mostly during emergencies. These loans are mostly taken to pay emergency medical bills, car repair bills, and other unanticipated expenses. But the most important fact is that it is not free from disadvantages. If you are not able to repay the loan within the end of the term, you may land up paying high additional fees. Moreover, these loans come up with high annual percentage rates which may range from 300% to 1000%. As compared to credit cards which charges mostly 12% interest rates, the rates on pay day loans are astronomically high. So it is always advisable to repay a pay day loans as early as possible.
Some substitutes to pay day loans:
It is of course true that pay day loans are helpful for meeting one time emergency expenses. But one should always consider other options too before going for a pay day loan. You may try the following alternatives before applying for a pay day loan:
Payday loans usually come with a very high interest rates and can be availed by anyone with a checking account. For availing a payday loan all you need to have is a permanent source of income. However, the pay day loans are mostly used by people who do not have a credit card account and so mostly people with a very bad credit score or people having no credit history at all take recourse to such type of loans.
The basic advantage of pay day loans is that it is very easy of access mostly during emergencies. These loans are mostly taken to pay emergency medical bills, car repair bills, and other unanticipated expenses. But the most important fact is that it is not free from disadvantages. If you are not able to repay the loan within the end of the term, you may land up paying high additional fees. Moreover, these loans come up with high annual percentage rates which may range from 300% to 1000%. As compared to credit cards which charges mostly 12% interest rates, the rates on pay day loans are astronomically high. So it is always advisable to repay a pay day loans as early as possible.
Some substitutes to pay day loans:
It is of course true that pay day loans are helpful for meeting one time emergency expenses. But one should always consider other options too before going for a pay day loan. You may try the following alternatives before applying for a pay day loan:
- If you have a credit card, then charge the amount you need from your credit card.
- You may take some advance from your employer and repay back on getting the next pay check.
- You may get some loan from your relatives and friends and finally
- The most important alternative to pay day loans is to prepare yourself to meet your emergencies. For this, always try to cut down unnecessary monthly expenses and keep the amount in your savings account. Although it is very difficult to curtail monthly expenses, try and save at least the minimum amount possible.
2 comments:
HI
This is a really informative post.I liked the last section "Some substitutes to pay day loans:"
Keep on posting such valuable informations.
:)
Adriana
Hi
Great post buddy.Keep on posting :)
Claudia
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