There are a few advantages of payday loans that could make them a necessary solution during a time of financial hardship. Some advantages of payday loans include how accessible they are for all manner of borrowers and how quickly they can be funded.
Payday loans can be used to cover any emergency expense that comes up unexpectedly or simply to handle standard bills until you are next paid. As they are short-term high-interest personal loans, most financial experts will advise you to only obtain payday loans when necessary and know that you can afford to pay them off in one lump sum on your next payday.
The application and approval process can be incredibly quick when compared to more traditional lending products. Some payday loans can provide funding in as little as one business day. The qualifications that must be met to be approved for payday loans are less strict than traditional loans meaning borrowers may be approved regardless of poor credit score or a past bankruptcy. Fewer requirements and potential approval despite poor credit are huge advantages of payday loans for borrowers in need of fast funding that may not be accessible to them elsewhere.
The most important qualifying criteria for payday loans is your proof of income that shows your ability to repay the loan when you receive your next paycheck. Typically, a payday loan application will require income verification through a couple of pay stubs. As your income is the most important determining factor in approval, payday loans are unsecured loans.
Payday loans being unsecured means that they do not require the use of an asset as collateral for the money you borrow. This is another major advantage of payday loans as you don’t need to put any of your belongings or property at risk. The unsecured and short-term nature of payday loans means they are higher cost. Therefore, it is vital you have a plan to repay them in a timely manner so as to not risk late fees or damage to your credit score. If you have a plan in place, the advantages of payday loans could be well-worth any possible drawbacks.
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