Advantages and disadvantages of payday loans

Screen Shot 2014-07-25 at 11.43.21 AMPayday loans have been in the news on and off for the past few months for various reasons, but what are the advantages and disadvantages of the payday loan? Our blog focuses on the payday loan and weighs into the debate on what the advantages and disadvantages of payday loans are.

ADVANTAGES

Speed. Speed is the number one advantage of the payday loan. If you fill out an application for a payday loan, chances are you will know within a few hours if it is approved or not, and if approved the cash borrowed can be released within hours.

Payday loans used in the right way can save you money. With all the negative publicity surrounding payday loans, you would be forgiven for thinking they are just to be avoided, but if you really think about it payday loans from reputable lenders like Wonga can really save you money. If your car breaks down and there is no money to fix it, and that means you can’t get to the airport for your holiday, or to that job interview you have been short-listed for, the fee for the payday loan pales into insignificance when compared to what one can actually save you if you are smart with your money.

Whatever the cost, a payday lender will never knock on your door demanding repayment. The main advantage of a payday loan is, whatever happens in terms of the repayment of a payday loan, you will never face threats of violence or intimidation designed to encourage you to repay the loan. Legitimate payday loans like those offered through Wonga are regulated, and as such lenders are subject to strict rules and regulations. If breached these rules result in possible fines or other sanctions for the payday lender and so, a payday lender worth its salt will know to abide by the rules.

Another option. A payday loan represents another option for people who struggle to get approved for credit elsewhere. You may not have a permanent address. You may have just moved back into the country and are not registered on the electoral register. You may have been refused credit in the past. Whatever your circumstances the payday loan option places fewer hurdles in the way and as such you may have a better chance of getting one if your circumstances are not attractive to the longer term lender.

DISADVANTAGES

A payday loan has a high APR. A payday loan is designed to be repaid over a short period of time. As such when it is compared to a longer term loan product, the APR comparison is much different. You should not be put off by high APR though, it is simply another factor to take account of when deciding whether a payday loan is for you or not.

Fees and charges. A payday loan is designed to be paid back in the short-term. As such if this is not done, penalties are applied to the loan, and these can be much steeper than what would be added to a long term loan, in the event of default. If you take a payday loan out, you should ensure that you are in a position to repay it fully, within the


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