Same day loans have been a controversial topic for years. They have many supporters, but also a lot of enemies, Barack Obama, amongst them. Why are opinions about them so diversified? Read the essential pros and cons of payday loans to find it out.
They are Unsecured
When it comes to traditional types of loans like mortgage, you have to secure them with your property. It can be your car or home, for example. If you default on your loan, you’ll lose what you secured. It’s not a case when it comes to pay-day loans, and it’s one of their greatest advantages.
Your credit score won’t Matter
In order to be accepted for a loan application, you have to have a good credit score. It’s not necessary when you want to take the same day loan – in fact, they are intended for people with bad scores. If your credit score for some reason is bad, then fast cash loans might be the only way for you to borrow the money.
Very few Requirements
Usually, lenders require you to have tens of documents and proof that you can repay the loan. When it comes to same-day loans, they don’t ask for much. All you need is ID or Social Security number, regular source of income and active bank account.
It’s the most expensive type of Loan
And that’s where their bad reputation comes from. Those loans have the biggest interest rate – they can go up to 800%. On average, for every $100 that you borrow, you’ll have to pay $15. You don’t have to be a genius to know that it’s not going to be profitable. According to experts from www.realisticloans.com/same-day-loans/, you should only go for fast cash loans when you need a small amount of money, that you can fully repay from your next salary.
It often happens that people fall into a debt trap – it’s a situation when you’re not able to fully repay your debt because the interest rates are way too high. That’s why so many people are unable to get out of this problematic situation.
The lender will have access to your bank Account
If you can’t pay off the loan or interest rates, the lender will be able to withdraw the cash directly from your bank account once you receive your next paycheck. You’ll also be charged with expensive fees for payment delay. Such an unexpected withdrawal will also harm your credit score, which is even worse. Why is it? You can check it out below, thanks to the infographic provided by Realistic Loans: