What are Payday Loans and How are
They different from Conventional Loans?
Payday loans (also called cash
loans) were traditionally given out when people got their wages. The employees
were allowed to borrow loans from the company which they were obliged to return
before the next payday.
These loans were far easier to avail
of than conventional loans at banks. Bank loans required collateral and took a
long time in getting approved. Modern day payday loans are similar in that they
are easy to procure and helps you gain access to quick cash during emergencies.
Bank and credit institutions still
take a long time to approve loans and the procedure is much more complex and
long-drawn. Payday loans can be useful provided you use them wisely. Loans
(payday or other loans) should only be acquired after you have examined your
finances and made sure you can afford the rates of interest. It's also
important to understand the time frame of repayment and the penalties involved
upon non-repayment of the loan.
To summarize, there are some
important questions that you need to ask yourself before procuring payday
loans:
- Do you really need one? Can you manage without taking out a loan?
- What are the rates of interest charged by the provider?
- Can you afford to pay back the loan? Have you calculated exactly how much you will need to repay?
- What is the repayment period? Can you manage to repay the loan within that period?
- In the event that you are unable to repay the loan, what are the penalties involved?
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