Five Ways a Payday Loan Is Better than a Traditional Loan
One of the best ways to meet an urgent financial need is a payday loan. This loan can cover any unforeseen expenses before your actual payday and save you from penalties due to late payments. As the term indicates, a payday loan is payable on your next payday, meaning you will be in debt only for a period of weeks.
Apart from that, payday loans offer other advantages over conventional loans.
When you apply for a payday loan, you will get feedback – positive or negative – almost immediately after filing your application. There is no need to fill lengthy forms that are common with traditional loans. The funds will be transferred to your account usually either on the day you applied or the day after that, and this will depend on whether or not you have provided all the required documents or details. Lenders always strive for a high transaction speed because it gives them an advantage over their competitors.
All payday loan transactions are conducted online. You don’t have to set an appointment with a loan officer or keep calling your lender to get an update on your loan application status. As long as you are online, you can transact with a payday loan provider whether you’re at the office, at home or wherever. With a conventional lender, you have to talk to your loan officer personally several times. One advantage of a payday loan compared to a credit card is that you will receive your credit in cash, allowing you to spend it in any manner you want.
Fewer, Simpler Requirements
Obtaining a payday loan is easier as you only have to meet a few basic requirements. For example, the main requirement is that you have a stable source of income, while traditional loans need you to put in collateral too. Payday loans don’t need you to provide collateral. Provided you can prove that you have a stable income that can pay off the money you borrow, you’re all good. Other typical requirements include registration as a permanent resident in your state and an active checking account. You should also be above 18 years old to apply.
Most payday lenders put a limit to how much you can borrow as a first-timer. After that, your provider will raise this limit, allowing you to borrow more next time around, depending on their policy and your salary.
Credit Rating Protection
You may dislike the short repayment period that a payday loan comes with, but it’s actually an advantage when you think of safeguarding your credit rating. If you apply for a regular loan, you have around one to two years to pay it off. But anything can happen within that time. You could lose your job, you could fall ill, etc. etc. etc. A payday loan is paid right on your next payday, and that will be it. All fresh again.