More and more people are utilizing payday loans to cover urgent expenses. When money is needed and time is a concern, payday loans can be a viable solution. However, these quick and easy loans come with their share of pitfalls.
Payday loans are offered through two mediums:
- Retail Payday Loans
- Online Payday Loans
Retail Payday Loans
Payday loans are generally associated with lenders who have a retail location. To secure a payday loan, a customer has to visit these lending locations and prove their identity and salary. The concerned loan amount is approved based on the borrower’s next paycheck. The borrower then writes a postdated check to the lender in the total loan amount plus the fees. The loan charges range from 15 to 30% for 14 days.
The loan repayment is made either by cash payment from the borrower or by electronic withdrawal from the borrower’s bank account. The lender can also process the postdated check to recover his money.
Online Payday Loans
Online payday loans are loans that are processed on the web. However, these loans have several advantages. With an online payday loan, a borrower only needs to fill an application form provided at the lender’s website. This application generally requests information concerning the borrower’s details and account information.
As with retail payday loans, it is essential to have a regular salary and a checking account to qualify for an online loan. After the loan approval, the funds are electronically transferred into the borrower’s bank account for immediate use. This online process is much faster than the one at a retail lending location.
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Listing the Benefits
Online payday loans have the following advantages over retail payday loans:
- The whole loan process can be completed in the comfort of one’s home.
- Online payday loans websites offer a 24-hour service.
- The amount is transferred within a few hours.
- The entire process is quick and easy.
- Customers can access loan services throughout the country.
- There is no paperwork involved.
- The loan amount is transferred electronically, making it completely safe and secure.
Although online cash advance loans have a definite advantage over retail payday loans, they share drawbacks. Online payday loans generally have very high-interest rates and fees. People tend to get caught in a loan cycle if they fail to repay the loan. It is always advisable to consider payday advance loans as the last option for covering expenses.
In this article titled What the Benefits of Payday Loans are, we discussed some benefits of getting money through payday loans. However, there are some cons, and it is suggested to look at those too before applying for a payday loan.