Archive for April 2021

Payday loans vs. cash advance loans

Payday loans and cash advance loans are the same concepts. They are short-term loans with high-interest rates. They are also called predatory loans by financial experts as they lure low-income people with a lack of financial literacy and trap them in a cycle where they end up paying much more in interest than their borrowed sum. Payday loans can be taken from some banks and other lenders, they are sanctioned irrespective of the credit score of the individual. The borrower only needs to show valid id proof, an active bank account, and proof of income source to be eligible for the loan. The money can be obtained within twenty-four hours and the borrower has to write an advance cheque with the due date of repayment. The cheque acts as a security, in case the borrower is unable to pay the total amount in the given time then he or she can extend their time period by paying another extra fee which is the agreed interest on the borrowed amount. If you want to know more about payday loans or want to calculate interest rates on these loans, check out https://paydayplus.net/500-payday-loans.

Pros of payday loans

Easily accessible

The payday loan can be easily accessible as the borrower is only required to show his id proof, a working bank account, and an active source of income. Payday loans are not secure types of loans as they do not take the borrower’s repayment capability into account. These loans are given irrespective of the credit score of the individual.

Loan can be obtained in a day

Payday loans are obtained in a day. Traditional loans from the banks take days to sanction and the money to arrive whereas the money from payday loans is obtained within a day. This makes payday loans good for people who are in urgent need of money.

Cons

High-interest rate or extra fee

The interest rate on the borrowed sum is high. Given the fact that these interest rates are levied on small principal amounts and for shorter time periods, these loans are profitable for lenders in a huge way.

Tendency to trap in a vicious cycle of debt

The inability to repay payday loans can start a vicious cycle that sees a person end up paying more money in interest than the borrowed amount. Therefore, giving payday loans its reputation of predatory loans.

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