Advantages and Disadvantages of Personal Cash Loans

With thousands of lenders waiting to offer personal cash loans to nearly anyone who has a regular job, this method of obtaining money quickly is moving from a risky/ fringe activity to standard procedure for many people. It’s always a good idea to examine the pros and cons of a major decision, and taking out fast cash payday loans is no exception.

Advantages:

Bad Credit OK:

This type of loan is based on your status as an employed person, not on any past history with the handling of money. You may have defaulted on loans in the past, or have large balances on credit cards, but circumstances like these will not have any influence on being approved for a payday loan.

No collateral:

Payday loans are usually issued against the fact that you have a job, with a regular paycheck. In effect, the job is the collateral. This allows you to get the money you need without jeopardizing the loss of your home, car, or other precious possessions. Most personal cash loans are small enough that no collateral is required.

No closing costs:

Although you will need to pay interest on same day cash loans, there will not be as many expenses as are attached to traditional loans. The largest of these would be closing costs, but there could be additional savings. You won’t need to take time off work to visit a bank, or spend gas on travel.

Quick turnaround:

Payday loans can usually be secured in just a day, sometimes in only a few hours. No traditional loan is going to go through that quickly. Sometimes, it would be difficult to borrow cash from a relative that fast! The application forms require only a few minutes to fill out, on line. Usually there is not even any documentation to fax to the lender. With the right credentials– a job, references, and being of legal age– a loan of up to $1500 can usually be approved in just a few minutes. The money will actually be in your account anywhere from two to 24 hours later. And you never had to leave your home or office to make it happen.

Loan amounts tailored to your needs:

Sometimes, all you need is a few hundred dollars. Banks aren’t interested in making small personal loans. It’s not worth the time required for them to process the paperwork. With that type of loan you lose two ways. You are forced to borrow more than you need which may tempt you into making impulse purchases, and there is a lot more work involved to actually get the money.

Disadvantages:

High interest rates:

This type of loan is designed to be paid back quickly. Thus if you actually figure the APR, you will find that the rate is 200% or more per year. However, unless you intentionally default on the loan, it will be paid back long before that. Many types of fees work out to have comparable APRs.

Easy to abuse:

It is easy to fall into a habit of abusing this type of loan because it is so simple to obtain. If you make use of personal cash loans on a regular basis, it will be difficult to ever get on a sound financial footing. The costs of the loans will add up, never allowing you to set that money aside to cover your own emergency needs.

Plan your personal finances carefully, set a budget, and use fast cash loans only when you have a valid emergency. In this way, personal cash loans can be one tool to use while building a financial reputation.