Payday loans are emergency solutions for unplanned payments, especially if you’re weeks away from your monthly salary. The cost of living expenses is gradually increasing every year, so people rely on a strict debt repayment regimen. Anything beyond or above their expected dues can turn someone from financially stable to chasing after debt. Because of this, people turn to immediate solutions that can prevent you from struggling in debt.
The problem with emergency payments
Having emergency bills to pay like medical expenses and renovation costs can be a complex situation, especially if you’re working with a limited amount in your savings. Although tapping into your savings is a straightforward solution, it leaves you vulnerable for the next crisis that can come knocking at your door.
Cash advance, or payday loans, are short-term financial solutions that can remedy any immediate debts you incur. Its noticeable drawbacks are high-interest rates and service fees. Ideally, you need to pay it back once you receive your next paycheck. Otherwise, you’ll incur high penalty pees and interest charges.
The risk with using payday loans
People consider payday loans an attractive option over getting a traditional loan from a bank, especially if they don’t have an appealing credit score. Remember that any loan will always incur expensive extension fees that can lead to a cycle of never-ending debt. It’s a typical scenario where people secure loans to pay loans for other loan providers. Although it can seem like a viable repayment technique, it will develop into a long-term financial crisis with severe consequences.
The benefit of payday loans
Since payday loans are seen as a common quick-fix for emergency expenses, many choose them as a viable financial solution. Additionally, you don’t need to have an extensive credit history for the required amount you need. Even if you have a less than appealing credit score, you can still secure a payday loan with minimum requirements. All you need is a source of job, bank account proof of age, and home address.
One compelling advantage of payday loans is that you can renew your current loan before it’s due. Although it requires you to pay an interest equivalent, it allows you to have more time to repay the loan with a more favourable interest payment. However, these rollover periods can also have a limit on the duration you can extend for repayment.
The process of signing up with a payday loan
As mentioned above, you’ll only need to provide a handful of things to apply for a payday loan. Some services may require you to provide a reference if your loan is defeated or if you’re unreachable. Receiving your loan will depend on your payday lender’s payment platform. Whichever platform they use, they’ll first need your signature to an agreement that documents the loan cost, interest fees, and assigned due date. Remember to review your contract and confirm any clauses that are confusing to you.
Like banks and credit unions, some payday loans have in-store locations where you can sign the necessary documents in person. However, some lenders utilize online platforms for a more seamless and convenient transaction for borrowers.
Conclusion
It’s not always advisable to take payday loans, depending on your financial situation. Additionally, you need to be cautious of the payday lenders you’ll enter into an agreement with. You should only receive offers for payday loans from reliable lending services. Thankfully, there are numerous service providers to choose from online.
Thankfully, there are different outlets in Australia for you to receive a reliable instant loan online. At Fundo, our unique credit scoring system notes consistent positive activity to increase your score and give you amazing perks! Apply now and receive great rewards from our Fundo loans!
The opinions expressed in the Blog are for general informational and entertainment purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice.