Payday Loans

The Best And The Worst Things About Online Payday Advances

Online payday advances are often advertised as the easiest way to get quick money for those who want it to meet temporary financial emergencies. For example, if your car has broken down and you don’t have money to fund its repair while the pay day when you are expecting your next salary on is still a couple of weeks away, these types of quick payday loans will obviously look like a divine help coming right from Jesus. But, in reality, since people often tend to overlook the negative aspects of such loans, they end up getting trapped into a complicated web of debts, coming out of which is never easy. This is when people start feeling the exact opposite of what they feel initially – the same loans now look like a deed of a Satan. Therefore, before you choose or reject a loan offer for payday advance, you are strongly recommended to have a clear understanding about both the best as well as the worst things associated with the same.

Brighter side – All You Need Is A Bank Account With A Decent Regular Income

The eligibility criteria for online payday advances are very easy. In general, you are required to have a decent employment record. However, if you have just started your first job, you may have to wait for at least three months before you can apply and get approved for an online payday cash advance. However, the more important thing is to have a checking bank account in your name where your employer transfers your weekly, bi-weekly or monthly wage or salary to. You can borrow up to 30 to 80% of your salary from payday lenders. Even self-employed professionals who do not get a fixed salary can also qualify easily for these loans provided they have a bank account with a certain minimum regular income. Some payday lenders approve even those loan applications where the applicants are neither in job nor in business but they still have a regular income, such as the ones who receive monthly alimony payments. But, in every case, having a bank account is a mandatory requirement.

Brighter side – All You Need Is A Computer With An Internet Connection

The second best thing about online payday advances is that you do not have to go anywhere to apply for them. Most lenders allow you to send your applications right through their official websites. You just have to fill up some basic details and submit the application. Some lenders do a

thorough verification and take at least one to two business days for approval. But, there are many other online payday advance companies that offer no-verification loans; they approve your loans instantly within just a matter of a few hours. They deposit the money directly into your bank account, which means you can get the cash you need within hours or mostly within two business days.

Brighter side – You Do Not Need To Have A Good Credit Score

The third best thing about online payday advances is that the approval does not depend on your credit score. Even if you have a very bad credit history with a very low current FICO score, you can still qualify for these loans.

Scary Side – Extremely High Charges

Despite all the above lucrative features, there are a few things about online payday advances that can be quite scary. To start with, these loans charge a lot of money. They give you $100 for a 14-day period and require you to pay back over $130, which is only a general statement because the actual repayment amount can be even much higher. For a $1000 of loan taken for two weeks, you may have to repay over $1500. Besides that, many lenders approve a certain amount of loan, but they actually transfer a less than the promised amount in the pretext of processing fee deduction.

Scary Side – Lenders Make Money From Those Who Don’t Repay In Time

It is very important to note that internet payday lenders do not make money just by charging you a high amount of interest and other charges. Their real revenue comes from those people who fail to pay their loans in time. This is where the horror story begins, as missing the due date drags the borrower very deep into a debt trap. It is often very late when such borrowers realize that the small amount of loans they had borrowed initially had turned into a monster of loans. Within a month after missing the initial due date, the outstanding balance can just go as high as even more than double. The longer delay you make in the repayment, the faster the debt balance keeps multiplying itself.

The Trap – Direct Withdrawal Authorization

Though payday advances are unsecured loans, lenders treat your bank account as a security against the loan you borrow. As per the provisions of these loans, you are required to provide direct debit authorization to your lender so that they can withdraw the repayment amount directly from your bank account on the scheduled due date. This provision shows its cruel face when the direct debit request fails due to non-sufficient fund in your account. This is when the lender gets a chance to trap you into a vicious cycle of debt. They first charge you a hefty penalty and then ask you to make a minimum certain amount of payment. After that, the remaining balance on your debt account just rolls over. But, considering the extremely high interest rates they charge, the outstanding balance only increases despite the fact that you already paid a part of it. Now, unless you pay off the full amount in one go, the debt burden will keep on increasing and will stay on your head like a nightmare.

As you can see, one side of online payday advances is very bright and highly lucrative, but there is a scary side as well. So, you are advised to do your calculations thoroughly before you make a decision in this regard.


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