Since the dawn of the internet age, the payday loan industry has grown tremendously. Nowadays, more and more people go online to borrow money when a sudden and unexpected expense arises. Thousands of payday lenders are flocking to the online space to grab their share of customers by offering instant loans to people in dire need of cash. Yet, with all the benefits that payday loans and its services offer, it is still a matter of debate for many. This article discusses some of the pros and cons of a payday loan.
Fixed term loans
Traditional lenders have a hectic application process before the loan gets final approval. So getting a loan in time to meet a short-term emergency from a conventional lender never works out well. However, payday loans have a simple application process and easy access to funds without any documents to fax. This is one of the important reasons that make payday loans a success and present it as a better option to consider in desperate times. Payday loans are quick, easy, and easy to borrow when unexpected expenses arise.
Whether you need a loan of £100 or up to £5,000 over a 12 month period, a reliable site like https://sunnyloansuk.co.uk/same-day-payday-loans/ can help you access the best loans available, without unnecessary hidden fees.
Works on high interest rates
Despite the significant benefit mentioned above, most critics accuse payday loans of exploiting the low-income communities they target. The high interest rates at which loans are offered have always been a matter of grave concern to many. When the doors of major lenders are completely closed to people with bad credit, payday loans offered by payday lenders help those who are short on cash to meet their urgent expenses. Simply put, payday loans are for everyone, but mostly preferred and used by underbanked customers in the UK. Since the payday lender provides an unsecured loan to underbanked people, the risk of default is quite high, and this risk factor determines the high interest rate of a payday loan. If a borrower plans to repay a loan before the end of the installment period, chances are that it will lower the interest rate.
Not for all the reasons
The typical use for a borrowed payday loan is to meet unexpected expenses. Well, you could have thousands of reasons for the sudden monthly shortage. But if you’re borrowing the loan to pay off another, it’s time for you to assess your financial damage. Rolling over or extending is also not advised as you tend to make it a habit and never get out of debt. Prepayments help improve your credit rating.
Never skip payments
A payday loan usually works from one paycheck to the next. However, some lenders also offer monthly installments. Whatever the situation, never skip payments, if you are aware that you will not be able to pay for the upcoming month, call to let your payday lender know. This helps avoid late fees and other charges. Advance notice to the payday lender will signal your intention to repay the loan in full. And it avoids all kinds of problems that usually arise due to non-payment.