So, you’re in desperate need for cash, considering taking a payday loan and wondering if it’s the right kind of loan for you. Well, in that case, before you take your no-credit-check payday loans in Las Vegas, there is much you should learn about payday loans so that you’re smarter when you decide to get one.
A payday loan, which is the more common name, is also known as a loan advance or a salary advance. It is unsecured, short-term and personal and is usually paid off as soon as you get your salary.
It’s become quite a popular practice in the past few years to apply for a payday loan as many people find them convenient sources of quick cash when dealing with emergencies that come up at the wrong time of the month.
The question is whether payday loans are any good and, if they are, how to watch out for the pitfalls that are associated with them.
The Good
#1 You Don’t Need Any Collateral
One of the advantages of a payday loan is that it doesn’t operate like your average loan, which is secured. When you take a secured loan, you have to put up some kind of asset as security for the loan, and you risk losing it if you can’t pay off the loan.
For example, with a mortgage loan the collateral is your home – if you can’t make the mortgage payment then the bank can foreclose on your home.
Because payday loans are smaller in nature, you don’t need to worry about any of that. The only guarantee you need is a post-dated check.
#2 The Application Process is Hassle-free
You will be surprised at how fast the application process for a payday loan is. You likely won’t spend more than an hour applying for the loan.
Also, unlike with other kinds of lenders, payday lenders do not perform credit checks, which can take quite some time.
You can, therefore, end up saving quite a lot of time, getting the money you so desperately need in a matter of minutes.
This however is a double-edged sword. While it’s great to get that money fast, it’s also extremely important that you take the time to read the terms of service and to understand the fees you will incur.
#3 They Are Easy to Access
You don’t need to have to worry about your credit history when you’re applying for a payday loan. You don’t have to worry about security, and you also don’t have to worry about time.
Payday loans are remarkably easy to access, and the amount you can borrow is easily determined by your salary. Moreover, you can apply for a loan online easily. The goal of payday lenders is to make their payday loans as easily available as possible for you.
#4 You Get Fast Approval
Because the lenders don’t look at your credit history and can determine how much money to lend you easily, the approval process is fast, and you can get your funds within an hour of application.
This an amazing benefit for people who have their credit history marred by late payments or defaults because normal banks wouldn’t approve loans for such individuals.
The Bad
#1 High Interest Rates
Seeing as a payday loan is a short-term kind of loan, you will likely pay a high rate of interest. The average annual rate for some unscrupulous lenders can run as high as 500 percent.
While this may unnecessarily high, it is actually what makes sense. Mortgage loans have low interest rates because they’re paid over 30 years. Payday loans are supposed to be paid within weeks and so high interest rates are the norm.
On top of that, it’s important to understand the difference between interest rates and APR. The interest rate is exactly what you think it is, the APR is the interest rate plus all the fees that you have to pay. When comparing loans, always look at the APR with a more careful eye than the interest rate.
#2 High Fees
Apart from interest, you may also have to pay fees known as origination fees. These fees are one of the most important parts of the loan that you need to watch for.
To compare the total cost of the loan including both the fees and the interest rate, compare the APRs instead of trying to compare them individually. If you pay the loan late, you could incur a penalty that is about 1.5 percent of the loan amount on average.
More Read:
- Finance 911: 10 Tips for Getting a Loan with Bad Credit
- 4 Tips and Techniques to Get Small Business Loans Easily
