Short Term Loan for Bad Credit – Payday Loan

Accessing Short Term Loan for Emergency.

Are you searching for short term loan that you can quickly use to bridge your liquidity gap? There is this particular short term loan option which is fast becoming a good alternative to other traditional loans. Possibly, you must have heard about it. It is Payday loan. We all know that people with bad credit cannot easily access loans whether short term loan, long term loan or even credit cards. So, one will ask, what is the fate of this category of people? Well, for every challenge, there is a solution somewhere else. Among the quick fixes in form of short term loan that is available to this group of people is payday loan. However, before you jump into this short term loan, I will like to take you through the advantages and disadvantages of the payday loans

Advantages

It does not require good credit. In case of payday loan, the lender will not investigate your credit score. So, if you have bad credit, you can still have access to this short term loan. The major requirements are; you must be above eighteen years old, you must have a regular income and a checking account. If you have all these in place, there is likelihood that you will be granted this short term loan. However, the amount of payday loan you will be granted may depend on your cash requirement and income level.

It is convenient: You can easily complete the application online without necessarily visiting the lender’s office. So, you don’t need to bother yourself with all the paper works that characterize other traditional short term loan.

It is fast: If your application is approved, you can get the money transferred into your checking account within twenty four to forty eight hours. It is almost as good as having your own cash available. This means that you can quickly attend to the needs which prompt you to apply for the short term loan.

No collateral required: You don’t need any asset as collateral. The only collateral you need here is the cheque which you need to deposit for the payday loan repayment.

Read Also: Understanding Cash Advance and its Associated Costs

Checks and Balances: As a result of the convenience of the whole process, people can be tempted to borrow beyond what they can repay thereby dragging themselves into debt. But in the case of this short term loan, you will only be granted the amount your income can easily carry. This will help you overcome the temptation of borrowing beyond what your ability to repay.

Disadvantages

High Interest Rate

The interest rate on payday loan is quite high when you compare it with other types of short term loans. The high interest rate may make one to default payment. If you are able to meet up with the payment, the interest rate may go up beyond what you will be able to cope with.

The duration is very short.

Payday loan is a very short term loan as it is expected to be repaid within the maximum period of thirty days. What happens if the income which the borrower is expecting is delayed by one reason or the other? This may cause him to default in payment.

It is only available for people with regular income

If you are a freelancer who is not having regular and consistent income, you may not be considered for is this short term loan. Also, it is mandatory that you have a checking account as you will need to deposit a check for the repayment of the loan.

Amount Involved

You cannot use payday loan to finance a big project. The amount involved is usually very small. Therefore, it can only be used to for small expenses.

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