Modern living can throw up some swerve balls from time to time, with unexpected bills coming straight from left field. Often, there is little time given to deal with the problem, making instant loan approvals necessary. When this is the case, the best funding option is an advance payday loan.
There are a number of advantages to taking out this kind of loan. Lenders will testify that fast loan approval always comes at a price, but if the right boxes are ticked, then there is little reason not to give the green light. The key issue is the ability to repay a loan.
However, there are some negatives to these loans, also commonly known as cash advance loans. Arguably the fastest loans to secure, they are equally regarded as the most expensive. In a financial emergency, however, getting the funds is the chief consideration.
Advantages of a Payday Loan
There are several advantages to getting an advance payday loan. The most obvious is that approval is granted so quickly, with some online lenders deciding in as short a period as a few minutes. This is because the process is automatic, with the information in the application form matched by a computer program against set criteria. If the matches are good, approval is given.
A second advantage is that approval is practically guaranteed and based solely on income. This system means even a terrible credit score can be ignored, since the loan is granted against an arriving paycheck. So, as long as the value is more than the sum borrowed, fast loan approval is a logical.
These cash advance loans are accessed so quickly that the funds needed to deal with a financial emergency can be deposited in the bank account of the borrower within a four or five hours.
Disadvantages of Payday Loans
Of course, with such ease of access it is hard not to expect lenders to get something in return – and they do. The truth is that advance payday loans are among the most expensive available. In some cases, the interest is 35%, while other lenders will grant a loan at a rate of 15%.
The reason for the high interest is two fold: firstly, the risk in ignoring credit histories is very high; and secondly, the profit margin is defined by a repayment term of as little as 14 days. For example, with a $ 1,500 loan at 15% requires $ 1,725 to clear the debt after just 14 days. This means a profit of $ 225 for the lender, which is far lower than a profit earned on 6-month personal loan.
Fast loan approval may come at a price, but lenders are still sensible enough to place a strict limit on the loan sums. That is why a cash advance loan comes as a maximum $ 1,500, ensuring repayment is possible.
Other Payday Loan Considerations
The best place to find an advance payday loan is online, and this can hardly be considered a surprise. The criteria that are set by lenders refer principally to income, although age, nationality and having a reliable job are basic expectations too.
The availability of a working bank account is also essential, as this is the way in which the funds are deposited. Online lenders can simply grant fast loan approval, and then transfer the cash in a matter of hours. When repayment is due, then the required sum is taken directly out of the account after the paycheck is deposited.
Accurate budgeting is essential since that can leave an insufficient sum to cover the general monthly outgoing. Still, despite the negatives, a cash advance loan is the best option when handling a financial emergency.