Almost all forms of borrowing money involve paying a fee or interest for the pleasure. Advanced cash payday loans have a reputation for carrying particular high fees, but in reality they are not necessarily the most expensive form of short term borrowing. Consumers who need to borrow money in a rush to meet a financial deadline can utilize payday loans to their advantage, even helping to avoid higher fees which they might incur through other financial penalties.
A credit card holder faced with a statement bill they cannot afford to meet in full runs the risk of a not only a late payment fee but a transition to a penalty interest rate which will be applied to the total balance for the next six months. A one off fee to obtain a payday loan which could be used to meet the credit card bill could represent a significant saving on the potential charges the unpaid credit card bill would attract. In a similar way those who go into an unauthorized overdraft zone may be able to save more by opting for a payday loan in preference to overdrawing their bank account.
Payday loans are available to those who have no credit, which precludes them from using traditional lenders who require a reasonable credit score before advancing a loan. Whilst many use payday loans irresponsibly for frivolous or unnecessary spending, others require a short term loan from necessity. When there is no other means of obtaining necessary funds payday loans can be a lifeline, comparable to pawn shops in the speed in which cash can be made available.
Even those who have access to traditional loans can face a delay in obtaining necessary funds in an emergency due to the time span involved in getting approved. Same day cash advance loans promise an immediate injection of cash through either the submission of a post dated check with a payday loan store, or through an internet application. The only requirements involved are the possession of a checking account and a steady monthly income from either a wage or social security payments. Those who have no internet access can utilize payday loan stores at convenient hours without the need to take time out of the workday.
Used responsibly and paid back on the due date, payday loans can offer advantages. The criticisms they draw are primarily based on the debt they can lead to when used irresponsibly, and to the high APR’s they carry. However, the APR’s are mostly irrelevant with short term usage of payday loans which actually carry a set fee that is more transparent to borrowers than the minefield of late payment fees and interest rates, which are levied on both overdrafts and credit cards.