Guide to Payday Loans: Should You Go For One?

Payday loans are short-term unsecured loans lent against the ?next paycheck? of an individual. By bypassing the credit check procedure, payday loans are a lot easier to score, but also come with instant repayment terms. All you need to qualify for a payday loan is a steady job that guarantees your income for the next few weeks or months. Payday loans are targeted at unprecedented expenses like medical emergencies, and should not be confused with consumer finance. Owing to their increasing popularity, payday loans have garnered much attention in the media, but it is important to learn all the facts before you form an opinion.

What People Are Saying About Payday Loans vs. the Truth

A simple Google search will tell you that payday loans are the center of much contention in the media. Stories of people will thousands of pounds of debt, interest swindlers, and fraud payday companies have spread like wildfire. While these stories are factually correct, they frame payday loans in a negative light in order to create sensation. Payday loans are not harmful ? as long as you remain responsible.

With a payday loan, as with any form of easy money, there is always the alluring risk of biting off more than you can chew. If you start treating payday loans as means to shop, party, pay bills or spend unnecessarily, you are inviting a miasma of recurring debt. Interest rates can be as high as 400% a year! So, obviously, these loans aren?t meant to be taken out for a year at all. The mantra is simple ? take a payday loan only IF you can repay it on your next payday! Newspapers aren?t lying. Payday traps are genuinely out there, but you can avoid them if plan your finances wisely.

Old v. New Methods of Payday Lending
Payday loans have come under the limelight lately because the entire process has been digitized and loans are now provided through websites. This has widened the reach of payday loans multifold and the application is a lot more convenient for loan seekers. Instead of visiting payday lender outlets, applicants send all their documents via email or fax, and are explained the terms of agreement online. In turn, they receive the money via direct deposit and have multiple methods of returning it too. This is comforting for lenders too, as they can set up an electronic withdrawal of funds from the debtor?s account on his/her payday.

Source: http://www.itsallaboutfinance.com/blog/guide-to-payday-loans-should-you-go-for-one/

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