Payday Loans Pros and Cons

Payday loans are very popular and hot in UK today. There's no surprise there seeing that the financial product is easy money. For people who always find themselves in a financial problem, the loan is an ideal quick fix solution.

If you're planning to apply for one, you should remember that much like with any other types of loans, there are pros and cons to consider. It's important to weigh both the pros and cons to ensure that you know your obligations and you know what you're getting out of it.

Payday Loans Pros

  1. No Credit Check - Payday loans attract borrowers mainly because of its no credit check rule. This means that those with bad credit and has been refused by banks can turn to payday loans as an alternative.
  2. Quick Cash - Payday loans are also one of the fastest loans to avail today. As long as you meet the requirements, you can apply online and wait for approval within minutes. Once approved, you can expect the money within an hour or so which means great convenience for borrowers.
  3. Minimal Requirements - Applying for a payday loan is practically hassle-free because of the minimal requirements. You'll just need to be of legal age, a resident of UK and provide proof of employment. If you can do that, you are welcome to get your loan today.
  4. Widely Available - Not only are payday loans quick to process but it is also widely available. When you go online, there are literally hundreds of lenders offering the product hence more options for borrowers.
  5. Smaller Amounts - Compared with secured loans, payday loans offer smaller amounts. In general, you can only borrow from 100 up to 1,000 which is just a fraction of what homeowner or logbook loan offers. Nonetheless, the product remains in demand because it's great for financial problems such as overdue bills or car repair that require immediate action.
  6. High Interest Rates - Another con that puts payday loans in a bad light are the high interest rates. The average representative APR for the product is at 1,000% but usually it can be more depending on your lender. To avoid skyrocketing interest, you need to keep in mind that payday loans are designed only for short-term purposes.
  7. Debt Trap - Since payday loans are easy money, some people are drawn to the product even if they don't really need it. This can lead to a cycle of debt where you borrow month after month even if the situation doesn't require you to do so anymore.

Payday Loans Cons

  1. Smaller Amounts - Compared with secured loans, payday loans offer smaller amounts. In general, you can only borrow from 100 up to 1,000 which is just a fraction of what homeowner or logbook loan offers. Nonetheless, the product remains in demand because it's great for financial problems such as overdue bills or car repair that require immediate action.
  2. High Interest Rates - Another con that puts payday loans in a bad light are the high interest rates. The average representative APR for the product is at 1,000% but usually it can be more depending on your lender. To avoid skyrocketing interest, you need to keep in mind that payday loans are designed only for short-term purposes.
  3. Debt Trap - Since payday loans are easy money, some people are drawn to the product even if they don't really need it. This can lead to a cycle of debt where you borrow month after month even if the situation doesn't require you to do so anymore.

Making the Decision

Before getting a payday loan, make sure to weigh the pros and cons thoroughly. If you think that the benefits outweigh the disadvantages then apply for one. On one hand, if you think that the interest rate is too much, you can always consider other alternatives. Click here to check other available solutions for your money troubles.