Cash Advance Payday Loan: Pros and Cons

For those who’re looking on a bit of extra cash, the cash advance loan is a great way. While it is easy to get access to these loans, the problem is often that people do not know the requirements. In effect, this means that they can lose out on money.

How Do Cash Advance Payday Loans Work?

If you are looking to borrow a small amount of money for a short period of time, then payday loans can prove to be quite useful. If you plan to use it correctly and for the right purpose, you are sure to have a positive experience with a payday loan and be able to achieve what you wish to by taking it.

Though it may sound appealing, payday loans or cash advances are often subject to different controversies. It has been known for destroying a person’s finances and pushes him into a pool of debt which is difficult to revive from. However, this happens when the borrower misuses the loan or misunderstands as to how the concept of payday loans work.

This is why it is essential that a potential customer first understands the advantages and disadvantages of getting cash advance or payday loans before actually getting one.

Advantages of a payday loan

Payday loans have a number of advantages and can prove to a timesaver. Here is what works.

1. Easy access – When a person faces any kind of financial emergency, payday loans are the best and fastest source of cash. Whether your car needs immediate repairs, you need to undergo a minor surgery, buy an expensive gift or need help in paying your rent this month – a payday loan can help you with that extra amount of money you need, in most cases within a few hours time.
2. No effect on credit rating – You can also protect your credit rating with payday loans. A mark against your credit rating can be avoided by taking a payday loan to meet immediate or sudden financial obligations which will help you tide over for a few days time.
3. No need for credit rating – A person’s eligibility for getting a payday loan is not affected even if he has not been able to establish a credit rating till now or his credit has been damaged in the past. The reason being that such cash advances or loans do not need a credit report of any kind.
4. Easy cash advances – You can become independent with cash advances. You may not necessarily have enough cash on hand from the pay checks, to meet day-to-day expenses, especially if you are still learning how to balance a budget and are young in age. You needn’t beg from friends or family for money when you can easily use a payday loan as and when needed.
5. Good way to save money- You can save good amounts of money with a cash advance.  It is a short term loan which helps you cover your bills and helps you avoid charges associated with credit card fees, bounced cheques and bank overdrafts.

Disadvantages of a Payday Loan

Here is a look at some of the reasons you need to think about before getting yourself a payday loans. Knowing how payday loans work and its disadvantages will help you take an informed decision.

1. Not suitable for the longer term – If you need to get a loan for a long period of time, then a cash advance cannot help you as such loans are available only for a short period of time.
2. Need of a bank account – You must have a current bank account in order to get a payday loan. Payday loan companies prefer not dealing in cash even if you do.
3. Be wary of interests – There are interest payments and fees involved in payday loans and the charges associated with it are quite high as compared to a normal bank loan. Moreover the fee doubles up if you cannot pay the loan on time.
4. Good for small amounts only – Being available for small amounts, payday loans are generally issued for amounts up to a thousand dollars. You might have to look for another source of funds if you need a larger sum of money even if it is for a short period of time.
5. Employment requirements – As a payday loan borrower, you must be employed full time. If you receive social assistance, unemployment benefits or work part time, you will not be eligible to get a cash advance.
6. Company specific terms and conditions – If you plan to apply for a payday loan online, then it is important that you check out the company you plan to take the loan from as the money might be offered by a fraudulent source. Ensure that they can be trusted as fraud brokers might resell your information without you knowing about it.

Your need of a payday loan needs to be understood in the context of why you need it. If you’re looking for a small amount of money to meet an immediate need, a payday loan works best but not so, if you really want a loan to buy in a new house.