Q&A: Common Questions About Payday Loans

by | Jun 16, 2016 | finance

What is a payday loan?

It’s a loan designed to get you through until payday. You basically borrow from one of the many Cash Advance Lenders Online to tide you over until you get your next paycheck. If you’re already short on funds and an emergency or bill comes in, you’ll find yourself in a really tight financial bind pretty quick. By using this financial product to borrowing cash from a lender, you can pay off your debt and get the breathing room you need.

How does it work?

The money is directly deposited into your bank account. Then the countdown begins. You usually have until payday to give back the money you owe on these short-term loans, this time with interest. However, some payday lenders might offer you a range of repayment methods you can choose from.

What are the pros?

If an emergency comes up and you need funds to pay off a debt or bill right away, this is one financial option you can consider, says How Stuff Works. You won’t have to suffer through an interminable wait—where your credit standing is reviewed and assessed—before you get approved. Payday loans are quick and simple enough to get.

What are the cons?

You should do your best to pay what you owe on time. Failure to do that will net you additional interest. The longer you fail to pay, the higher that interest gets. In the end, you could spend a lot just paying off that interest.

Why opt for a payday loan?

Never use this financial tool as a stop-gap measure to fill up the monthly holes in your budget. Go for this option only if you have the funds to pay off what you owe on time. That’s how you keep from paying more than you should.

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