Do you need a quick loan to offset your bills? Payday loans can rescue you in the nick of time, but beware of the downside. You can easily get caught up in a debt cycle if you have to resort to short-term loans frequently. Here is a simple guide to what you should know about payday loans before applying for one.

What is a Payday Loan?

A payday loan is a short-term loan (usually for less than 30 days). The lender charges a high-interest rate for a short period (until the next payday). People use these types of loans to cover unexpected expenses that can’t be covered by cash on hand but can be paid back when they receive their next paycheck.

How Does It Work?

As the name suggests, a payday loan is designed to provide credit for people till the next payday. A higher interest rate is charged than a traditional bank, but the process is quick, and there is no credit check.

These loans are given by microcredit traders who run an in-person or online application, provided the borrower provides information about their current income position from their employers.

The Basics of Payday Loans

High-interest rate. Payday loans often charge a very high-interest rate to borrowers. It has an average interest rate of about 390%APR for two weeks, and beyond two weeks, the rate can climb to a staggering level of 520%APR. Keep in mind that these loans are meant to be paid in full in 2-4 weeks.

No Need for Collateral. A payday loan is a collateral-free loan. It is easy to access because there is no credit check, so these loans are available to people with low credit scores. The applicant must show proof of employment.

Quick Access to a Loan. A payday loan provides one of the fastest loans to access. Not just prompt but anytime access to a loan because the micro-traders have bridged the barriers that prolong loan acquisition.

Flexibility in Payment. A payday loan provides some level of flexibility in repayment options. Although they are short-term loans with an average repayment duration between 2 weeks to 1 month, some lenders may extend the period of loan repayment to 3 months.

Payday loans have their share of advantages, including providing easy and quick access to cash in an emergency. However, the disadvantage remains that its interest rate costs more than conventional loans. And there is a chance of some individuals ending up in a negative debt cycle. Payday loans can help, but approach with caution.

Cash Fast Loan Centers

Do you find yourself needing some cash before your next paycheck? We can help. Check out the Cash Fast Loan Center near you.

Cash Fast Loan Centers

Are you in need of some quick cash due to an unforeseen emergency? Cash Fast Loan Centers can help. We offer payday loans and title loans to qualified borrowers. Contact a local office near you and speak with one of our loan specialists to see what we can do for you.