According to statistics, about 80% of employees have availed of payday loans at least once during their entire career while working. Most have not borrowed again afterwards due to the fact that interest rates are higher compared to other types of loans. Although there are no hidden charges, there are penalties for late payments. Thus, it will be better not to avail of this type of loan if the expenses can actually be postponed and if there are other means to acquire money other than borrowing.
But for those who have actually benefitted from borrowing a payday cash advance once or more, these are some of the reasons why this type of loan is popular:
- No credit checks. Other loans will require rigid credit verification that may make the borrower feel intimidated especially if they have poor credit standing. Payday related loans do not employ credit checking bureaus for strict credit checks.
- No collateral needed. Auto loans, home loans, business loans, and others will require collateral in exchange for loans to be granted. Cash advance loans on the other hand does not need any collateral.
- Minimal requirements. What’s required of a borrower is only minimal. A borrower must meet the following criteria: must be at least 18 years old, a citizen of the country where the loan is offered, employed with a stable income, and owns an active bank account. Funds will be deposited to the said account once the loan is approved. The same account will also be utilized to debit payments during the repayment period agreed upon.
- Easy application. Most payday advance loan providers today process applications online through a form which can be filled out within 5 minutes. Application forms can also be returned through fax or processed over the phone. In some cases, depending on the company where you apply the loan from, interviews may be conducted over the phone for verification purposes. But there is normally no physical appearance needed, not even during signing of the contract because digital terms and conditions can be emailed or faxed from the broker to the borrower and back again. Even a physical signature is no longer necessary because it can be replaced by affixing a digital signature instead.
- Fast approval. You can expect loan applications to be approved after a few hours when you apply. This is because your application is immediately endorsed to expert brokers who will in turn look for financers who will fund your loan.
- Direct deposits and debits. Funds are conveniently deposited directly to your bank account within 48 hours after the loan has been approved. Payments are also debited through the same account so you won’t have to pay in person.
- No hidden charges. Although the interest rates appear to be higher when compared with other types of loans, this is because the repayment period is spread out within a limited period only. Penalties on the other hand can be avoided when you pay within the payment period agreed upon. You are at least assured that there are no hidden charges.
These are just 7 of the reasons why payday loans are popular. There are more which can be included here based on a borrower’s experience.