It’s rightly said that life is a rollercoaster ride, and the unexpected twists and turns can pop up at any time. Sometimes those instances result in unanticipated expenses that can place a short term strain on a household’s cash flow. Options are available to the general public to deal with financial uncertainties.
Payday loans are one such provision to meet the short term obligations. While the interest rate is high, these loans can be a tool to fill a short-term gap. While the option of payday loans may seem attractive, they need to be approached with some caution. Here we have compiled both the benefits and the risks of payday loans to give you a clear picture.
What Are Payday Loans?
Concisely speaking, payday loans are short-term high-interest loans. The borrowing amount ranges typically between $1000- $5000; they can go as high as $10,000. The paying tenure is between 16 days to 1 year based on the amount, paying capacity, and a range of other contributory factors.
Pros Of Payday loans
In situations that you cannot shoulder immediately like an unexpected medical emergency, payday loans can be beneficial. Given below are some of the pros of payday loans:
Instant cash: While banks require a lot of documentation and processing time for a loan, you can receive the money the same day with payday loans.
Ease of payments: Payday loans are effortless to settle too. The payment is automatically deducted from your salary account on your paydays or an agreed-upon date.
Cons Of Payday Loans
While your immediate obligations may be covered with a Payday loan, new debt is added. This debt can be scarier because of the relatively short time required for repayment. Some of the cons associated with a Payday loan are: