Payday loans pros and cons

22 May 2013 - James Larkin

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Payday loans pros and cons

Payday loans widely have a bad reputation, and their lenders are often looked upon as people who benefit from other people's problems.

However, a payday loan does not automatically mean it is a loan to be avoided.   Indeed, it can quickly repair a short term financial emergency.    This could be the repair of a machine which one needs to work, an urgent medical treatment for which one is not insured, or to bridge a financial gap.

What is a payday loan?

A payday loan is a loan which will usually be paid out very quickly and which one will have to repay the moment one receives one's next salary, hence the name payday loan.    The amount of money you can take out cannot be higher than the sum you receive on your next payday.

What is the disadvantage of a payday loan?

Payday loans are usually extremely expensive.    Their interest rates are so high that whatever you have to pay for with the help of this loan will cost you considerably much more money - this is why a payday loan only should be applied for in an urgent situation.

Another reason why a payday loan could be not advisable is the fact that people in a financial emergency are usually in financial difficulties already.    Taking out a loan in such situation could mean only a temporary relief and easily can result in further problems and serious debts.

Before taking out a payday loan one should, even if in a hurry, look and compare different lenders first, and never forget to read the small print very carefully.



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