While some may argue that payday loans cost borrowers more harm than good, in most cases, it depends on an individual borrower to determine which characteristics outweigh which ones; the good or the bad. Most employed people usually depend solely on their salaries as a source of income to meet all their expenses for the whole month. It is however no a secret that sticking strictly to one’s monthly budget is easier said than done, especially for those whose expenses exceed their salaries. Most people therefore find themselves broke towards the end of the month and as such have to turn to payday loans as a source of funds to push them through to their next payday. How payday loans work is that the lender, after ascertaining whether a borrower qualifies for a certain loan amount, calculates an appropriate lending fee for the borrower. The borrower then writes a cheque to the lender of the total loan amount plus the lender fees. This cheque’s due date is put on a date that is post the borrower’s pay day. Therefore, when the borrower’s payday arrives, he has the option of repaying the loan plus lender fees to the lender or letting the lender cash in the written check on the post-check date. While they may provide short term financial stability for their borrowers, they have several characteristics that make them either good or bad to the borrowers. The borrowers therefore have to carefully weigh between these two alternatives in order to determine whether or not to take up a payday loan. These characteristics include:
- Easy requirements and fast processing– The one major advantage of payday loans is the fact that they offer very quick cash, and have very easy requirements to qualify. Unlike other loans which take days to process, this one can take as little as only fifteen minutes and you will have access to your approved cash. The requirements for these loans are same as the general requirements for all kinds of financial transactions. These include; be 18 years of age and above, have a legal identification document, have a financial account that is registered to your name and provide proof of income.
- Usury rates– the interest rates charged on pay day loans are usually referred to as usury rates and have often been banned in most states in the US including New York. This is because they are usually very high, way higher than the allowable market interest rates at any particular time
- Credit scores are a non-issue– payday loans are usually very much accessible to borrowers with bad credit because credit is not one of the factors they check during the application. You do not to have a credit card or even a bank savings account in order to use pay day loans. Therefore, those with poor credit scores can always turn back to payday loans whenever they are caught up in a financial crisis.
These are some of the characteristics of payday loans that can help you determine whether or not they are good or bad for you cash money near me.