There comes a time in everyone’s life when they’re in a bit of a pickle. You know, you’re low on cash and your landlord’s riding you for the rent. So, what do you do? Well, unless you can magically make money appear out of thin air, there’s not a lot you can do other than take out a loan.
However, if you’re in that particular situation, there’s a good chance you don’t have many assets to your name and you can’t take out a massive loan to set you up for the time being. Instead, you need just a bit of cash to make ends meet. So, what do you do? You take out a payday loan.
Now, payday loans get a lot of bad rep, but in reality – they’re not really that bad. They’re handy, easy to get, and they’ll definitely sort your financials out for the time being. And, we’re going to prove that to you today.
What Are Payday Loans?
Put simply, a payday loan is a short-term loan that you can take out to tide you over until your next payday. Now, the reason they’re called payday loans is because, well, you guessed it – you’re expected to repay the loan on your next payday.
How Do They Work?
Payday loans are incredibly easy to apply for and even easier to be accepted for. All you need to do is head online, fill out a short application form, and within minutes you could have the cash in your account. It really is that easy.
Are They Fixed Or Variable?
Now, this is where things get a bit more complicated when it comes to loans in general. You see, when it comes to taking out a loan, there are two types of interest rates – fixed and variable. And, each type comes with its own pros and cons.
Fixed interest rates mean that the interest rate you agree to when you take out the loan will remain the same for the entirety of the loan. This means you’ll know exactly how much you need to repay each month and you can budget accordingly.
Variable interest rates, on the other hand, can change at any time. This means your monthly repayments could go up or down without warning and it can make budgeting a bit more difficult.
So, which one should you go for? Probably fixed, right? Well, you’re in luck because payday loans come with fixed rates. And, when you think about it – how would they be any different? They’re due by your next paycheck either way.
What’s The Average APR On A Payday Loan?
Now, the Annual Percentage Rate (APR) is the amount of interest you’ll pay on a loan over the course of a year. And, when it comes to payday loans, the average APR is around 400%. You could find the ones that are closer to about 200%, but you could also go as high as 800%, so do your research. Be smart about it.
However, it’s important to remember that this isn’t the interest rate you’ll be paying on your loan. The reason the APR is so high is that payday loans are such short-term loans. For example, if you took out a loan for $100 and had to repay it two weeks later, you’d only be paying interest for those two weeks – not 365 days.
How To Get A Payday Loan
Getting a payday loan is incredibly easy. All you need to do is head online, visit website like this and fill out a short application form. Once you’re approved, the cash will be deposited into your account within minutes.
All you’ll need is proof you’re employed, an ID of some sort, a bank account to receive the money, and you’re good to go. It really is that easy. It rarely takes more than a few hours for the funds to be at your disposal.
How To Repay A Payday Loan
Repaying a payday loan is just as easy as taking one out. When your loan is due, the amount you borrowed plus the interest will be automatically withdrawn from your account. And that’s it – you’re done! The debt is paid and you’re free to move on with your everyday life.
The Benefits Of Payday Loans
There are plenty of benefits that come with taking out a payday loan. For starters, they’re incredibly easy and quick to get. And, because they’re so short-term, you won’t have to worry about being in debt for years on end. Additionally, the interest rates are fixed, which means you’ll always know how much your repayments will be. There are a few others, but they’re pretty much situation-dependent and they all ride on these three we’ve mentioned, so they’re basically the same thing.
Things To Watch Out For With Payday Loans
Of course, there are also some downsides to taking out a payday loan. For one, the interest rates are quite high. And, if you’re not careful, you could find yourself in a cycle of debt that’s hard to break free from. Additionally, because the loan is due so quickly, it’s easy to end up borrowing more than you can actually afford to repay on such short notice. So, make sure you only borrow what you need and that you have a plan in place for repaying the loan on time.
Alternatives To Payday Loans
If you’re not sure a payday loan is right for you, there are plenty of other options to consider. For instance, you could take out a personal loan from a bank or credit union. Or, you could use a credit card cash advance. Additionally, there are even some apps that offer short-term loans but those are pretty much the same thing as payday loans – just in a different package.
All in all, payday loans are a handy solution for those who need a bit of extra cash to tide them over until their next paycheck. Just be sure to take out what you need and that you have a plan in place for repaying the loan on time.