A payday loan is one of the best ways to deal with a financial emergency. This loan can cover any unforeseen expenses before your actual payday and save you from penalties due to late payments. As hinted by the term, a payday loan is a loan you pay on your next payday, so you will only be in debt for a week or two.
Besides that, there are other significant advantages offered by a payday loan in comparison with a traditional loan.
Applying for a payday loan, you will get a response, whether positive or negative, almost instantly after you submit your application. You need fill extensive forms as conventional loans require. In most cases, the funds will be moved to your account either during your date of application or within 24 hours, depending on whether or no you have completed the lender’s requirements. Lenders always strive for a high transaction speed because it gives them an advantage over their competitors.
When you apply for a payday loan, all transactions will occur online. You don’t have to talk to a loan officer in person or call the lender several times asking for updates on your application’s status. Everything is done on the Internet, regardless of your physical location. With a traditional lender, you need to personally come for several meetings with your loan officer. One advantage of a payday loan compared to a credit card is that you will receive your credit in cash, allowing you to spend it in any manner you want.
Obtaining a payday loan is easier as you only have to meet a few basic requirements. For example, the main requirement is that you have a stable source of income, while traditional loans need you to put in collateral too. Payday loans don’t need you to provide collateral. As long as you can prove that your income is stable and enough to pay off your loan, you’re good to go. Other typical requirements include registration as a permanent resident in your state and an active checking account. You also have to be over 18 years old to qualify.
If you’re a first-time borrower, a payday lender will restrict the amount that you can borrow. After that, you will be able to borrow a bigger amount, depending on the lending policy and of course, your income.
Less Risk to Your Credit Rating
You may not like the fact that payday loans come with a short repayment period, but this can actually be an advantage, considering that this helps protect your credit rating. If you apply for a regular loan, you have around one to two years to pay it off. But who knows what can happen in that stretch of time? You can get sick, lose your source of income and so on and so forth. A payday loan is paid right on your next payday, and that will be it. You have been refreshed.