Disadvantages of Payday Loans
While payday loans can be beneficial to those who find themselves in need of cash before their pay check arrives, there are also pitfalls to this kind of loan.
Cash loans are indeed beneficial to us especially in time of emergencies when we need an immediate financial source. Good thing there are institutions offering quick cash loans with minimal requirements to be submitted. From small amounts like $100 to huge loans of $1000 to $5000, you can avail of this benefit if you have the right qualifications. Primarily, you just have to be employed or have a stable source of income to guarantee your reliability for payment. Because this type of loan is so easy and convenient to obtain, many are falling into the wrong path and getting buried in debt. Loans are advantageous only if you handle it responsibly. Be aware of the disadvantages of payday advance loans.
Payday Loans Cons
- Some payday loans can be very expensive.
We are not generalizing all financial lending institutions but the truth is that some lenders charge very high interest rates of up to 200%. This is completely understandable because this type of loan is high-risk, which means that borrowers always have the option to run away from the lenders without being sued. Therefore, before you consider applying for quick cash loans, make sure that your purpose is very important and urgent in nature and that there is no other alternative for it. Also, ensure that you can pay not only the principal amount but also the high interest rate.
- Payday cash advance loans can be very addictive.
Yes, this is true for many borrowers. Because it is quick and convenient, many are tempted to apply for a loan even for their smallest financial needs. Once the first loan is over, you will be forced to apply for another one, not because you want to, but because your money is spent on paying for the interest rate. Thus, the cycle never ends until you resist the temptation to obtain loans. To avoid addiction, set your priorities and as much as possible, do not dive into the convenience afforded by quick cash loans if you do not really need them.
- Quick cash loans have the shortest payment term.
Unfortunately, they do. Typically, you have to pay the total amount, the principal and interest rate, within a month. This is somewhat logical because you can get the approval of your loan – in many cases in as fast as 30 minutes; therefore, it is also expected that you pay for it the soonest possible time. Otherwise, you will drown on piled up penalty fees and be constantly bombarded with demand letters by the lending institutions. You cannot negotiate for 12 or 24 months payment terms, such as what banks offer, because for the providers of these payday cash advances, shorter payment terms are their safety net to stay in the business.
- Payday cash loan is not the solution to your problem.
Believe it or not, there are instances that instant cash loans can make your problem worse than it was before you started the loan. Loans are temptations, in general. And if you cannot handle your finances wisely, then you do not have the right to avail of loans, because the truth is that loans are only for people who are responsible when it comes to paying their debts.