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We are often faced by unforeseen events in life that take a toll on our financial situation. Events like a spell of unpaid sick leave, major car repair,unexpected bill, etc. always call for a lot of spending which further makes the matter more complicated and can not be fitted into your monthly income. At such times, a financial solution, and a quick one, is always needed. This is the moment when individuals start looking for every possible source of loans. At such times, payday loans can prove to be a blessing for them.
Payday loans is a type of credit which you can repay on your coming paydays; hence the name. This source of credit can come very handy for the salaried borrowers who want quick cash.
A lot of debates have been carried out on the usefulness of payday loans and a lot of questions have been asked about the payday loans being appropriate or not. Well, these loans may have caused financial troubles to the uninformed borrowers, but they have rescued most of the borrowers from financial troubles and major money crisis.
How Payday Loans Work
Payday loans have some peculiar features which have led to its popularity even more. Applying for a payday loan is a child’s play and the process is very fast. Generally, the loan amount gets credited to your account within a few hours, or maximum within that day. A lot of major payday lenders credit the amount in just an hour or less.
This form of credit does not require the borrowers to have a perfect credit record. So even if you have defaulted on a lot of loans before, don’t worry about your bad credit rating. You have equal chances of getting a payday loan. The lenders don’t concern themselves totally with the older history of the borrower but the more recent transactions. They assess and approve the application only if they think that the borrower will be able to pay back the loan on time.
Hence, you are required to show them a steady income proof. This is the reason why payday loans are given only to salaried people. Self-employed individuals may find it harder to get this credit. You also require to have an active bank account where the loan will be deposited.
The current technology and internet have benefited the lenders as now the borrowers can apply for payday loans online from the comfort of their homes. With just a few clicks and the correct documents, you can secure a loan right into your bank account in just a few hours without even leaving your house!
Payday loans are meant for meeting urgent financial requirements, and thus they are not of large amounts. It is important to carefully read the conditions that are outlined by the lender before you make the application.
Can Payday Loans Put You Into A worse situation?
This is perhaps the most talked and debated about question of all time in the lending industry. Well, the straight answer to this is that it depends who is borrowing. How a loan affects the borrower depends on the borrower himself and his knowledge, awareness, and financial skills.
Firstly, payday loans are meant to be used only and only during times of emergency. Due to the easy availability and superfast approval of payday loans, individuals borrow these loans to fulfil their luxurious demands. Doing this sets is not advisable. Due to a raised lifestyle and regular borrowing habit, they soon end up defaulting the loans that they have taken and this leads them to a major financial crisis. This also damages their credit record.
Here’s a common misconception- payday loans are offered to every salaried individual no matter how poor his credit rating is. The lender is concerned that you have the willingness to repay the loan and also the ability to do so. Anyone who shows that they do not possess both of these are not a good risk. These are the applications which get rejected.
Using Payday Loans Safely
Payday loans can prove to be a blessing during bad times, but you must also take a lot of precautions before you apply for a payday loan.
First of all, you must calculate your income and spending to see if you can afford a loan. There is no point in getting a payday loan if you cannot afford it, because anyhow you will end up defaulting it, which will further spoil your credit history. So make sure you can repay what you take.
A good practise is to try and repay before time. Now this can look impossible considering that you have taken the loan to be able to pay it back on the next payday. But it is still practical. You can ask your family or friends for monetary help and can repay the loan with it. This will help you eliminate the burden of loan quickly and also eliminate the chances of not being able to pay it back.
Make it a habit of saving money. It is not a good option always to get a loan, and if you have a good amount of savings to your side, you can easily tackle the situation without risking your credit history. Try to pay off the payday loans as soon as possible and try not to get a loan again as far as possible. Make sure you turn to payday loans only as the last resort and never ever treat payday loans as an addition to your monthly salary.
Payday loans have benefited a lot of people and have helped the borrowers during financial troubles. But you should know both the pros and cons of these loans and must always be knowledgeable and careful about the terms and conditions. Financial troubles are inevitable, but at least you can be a responsible and aware borrower.