Payday loan is a type of loan in which you have to pay full amount with interest rate at the time of maturity. This loan is a short-termed loan which means you have to return it in less than 7 months with interest or else you will have to renew your loan, you can get into serious problems too if you don’t do that on time.
This loan is an unsecured one which means that there is no legal activity taking place between the borrower and the debtor unlike the mortgage which requires the legal documents of the property but this can vary form one lender to another.
The speed of acquiring a loan attracts many people, it takes roughly 15 minutes to acquire a payday loan. The loan approval speed is so fast it blinds many and they don’t even think about the huge interest which will they pay at the time of maturity. After acquiring several loans, they find themselves under the huge burden of interest with no cash in pocket. Only Stock market speculators can bear the load as they are in trade where they can make hundreds of dollar with right decision.
Why acquire a Payday loan?
There can be number of reasons to acquiring this type of loan. Many people acquire this loan because their income is not enough to paying their monthly bills or they just want some money to spend without thinking this is not good for them.
Payday loans are very popular in young generation especially in United Kingdom because of the simplicity of the process of acquiring a loan. There are numerous cash shop scattered across in many cities which are offering payday loans up to £ 1000 in under 15 minutes.
Consider you want to acquire a loan of 200 pounds, after 6 months you will have to pay total amount of 381.89 pounds.
How to get a Payday loan
To get this loan you have to visit a cash shop. In the shop you will request for loan, the clerk at counter will grant you the loan after receiving a postdated check of full amount with fees written and signed by you.
In the next month you have to pay your loan first, if you are unable to do that debtor will redeem that postdated cheque and you will go back to the same condition in which you were before visiting the shop. Always remember to get your written cheque back after returning loan at the shop.
Payday loans Advantages and disadvantages
Payday loans have many advantages and disadvantages some of them are given below.
- It is a quick solution for your money problem.
- You can get this even if you are not eligible for a bank loan.
- If you want quick cash then Payday loan is for you.
- Fast approval of loan.
- It is a gain of money in short term but in long term, it is a waste of money.
- Payday loan is addictive ounce you start acquiring it, it will become your habit.
- Loan has very high interest rate as compared to other loans.
- You will have to return the full amount with interest rate.
However, there are less benefits for the borrower and more benefits for the lender. It is another tool to make unemployed and poor people poorer and it does not change their financial condition at all.
Payday loan is not recommended unless you are in serious need of cash. As discussed earlier it is a scheme to steal hard earned money of poor people around the world just by making the whole process look faster and easier. Many people who are in this type of debt are young, illiterate, unemployed and poor. They make living out of the money which government grants them to survive and the companies offering this type of loan feed on their blood and pockets.