We all find ourselves in a tight spot financially from time to time. Financial responsibilities may overburden our income such that taking credit becomes inevitable. Should you experience this situation, you can still overcome it with the right approach to taking credit and loans. Here’s a brief consideration of how you can utilize payday loans to meet your financial needs during a financial crisis.
What Are Payday Loans?
They are short-term loans that are given to borrowers to meet immediate financial obligations that are in between their paydays. Once you borrow a payday loan, you are liable to pay it from your next salary.
To understand how this loan works, we can use an illustration of an advance that your employer has provided on your monthly salary. The advanced amount is deducted from your salary at the end of the month. In the same way, the amount that you’ve borrowed when taking a payday loan is paid from your monthly salary.
Characteristics of instant Payday Loans
- They are usually of small denominations.
- They have a short repayment period. Most of them are repaid within 2 to 3 weeks after borrowing. However, as of recent time, some have a long-term horizon. You can even repay within a 3-month timeframe.
- Full payment of the loan is required at the end of the month or at the time you receive your monthly salary.
- They are usually taken to meet immediate financial obligations.
How They Work
Quick payday loans are one of the easiest loans to apply for, provided that you’re working. They are treated as unsecured loans; thus, no security, property, asset or collateral is tied to it. They are also one of the fastest loans to be disbursed as they are processed and deposited within a day or two days at most.
During the payday loan negotiations, there is an agreement that’s binding on both the lender and borrower. The agreement contains the terms of the loan, the obligations to be met before, during and after the loan disbursement, and the responsibilities of both parties to the transaction.
But in most cases, the agreement will tend to spell out the repayment terms and the interest to be paid on top.
Avenues for Repaying the Loans
- Most borrowers place standing orders as a convenient way of repayment. It forestalls the possibility of late payments due to forgetfulness.
- Direct debits can also be used to avoid extra charges.
- Post-dated cheques are also a viable way of repayment.
All the above though are subject to the agreement between you and the lender.
- Provides a Timely Financial Solution. They can be handy during household financial strains. Even with the best financial planning, there will always arise a small unexpected crisis.
- Flexible and Easy to Obtain. They are flexible as far as individual credit scores are concerned. They don’t require you to disclose your financial history. Also, you never have to face the embarrassment of airing your financial predicament to others.
- They are Certain. They are guaranteed payday loans. For as long as you have a payslip and are active in work, you are guaranteed to get them.
- They are Expensive. Due to the short-term nature, these loans tend to be expensive. Some lenders charge up to 30% interest. A typical normal loan on a credit card charges up to 12% on average. Thus, you may fall into a pitfall of obtaining the loan but never get out of it.
- Are Rigid. To obtain this loan, you have to be working in a permanent workplace. You also have to be earning a fixed salary.
At Bonsai Finance, we delight ourselves in helping thousands of people who are seeking financial solutions. Our uncomplicated and dependable service will get you the needed advice on crucial financial matters. Contact us for timely and informative advice on which lenders are best for getting these loans.