Posted by admin on June 19, 2012
Quick loans can be great in an emergency however a payday loan will always come with pros and cons that should be suitably weighed up before going ahead with such a loan. These pros and cons mainly apply to how you choose to handle your account with the most careful borrowers not suffering from any of the disadvantages that come into effect if you don’t pay back the loan as agreed or default on other terms of the agreement.
- Pros of Quick loans
Quick loans are exceptionally fast and depending on the time of day you apply, money can be placed into your account in as little as one hour! These are ideal loans for those who need the money right now even if it’s only for a day or two.
Choose your term:
Many payday loans are flexible and give you the opportunity to choose the day you will be paying back your loan and you should consider this carefully when you apply for your loan. A £100 loan over 15 days may only cost £20 in interest whereas a 30 day loan would cost £40, if you don’t need the money for that extra time don’t take it! Remember, the shorter the term the cheaper the loan.
If you pay back your quick loan as agreed you will help improve your credit rating and show to other lenders that you are trustworthy and can pay back credit without any problems. Ultimately, over time this improved credit rating will open up cheaper credit options for you.
Bad Credit Applicants:
If you need money quickly and you have a bad credit rating then most quick loan lenders, like http://quickloans.org.uk will still accept your loan application, this is a massive pro for many as payday loans tend to be a last option for those who have exhausted all other paths such as credit cards and overdraft extensions.
- Cons of Quick Loans
High Interest Rate:
Quick loans are notorious for having rather high interest rates which are calculated on a daily basis and APRs can go up to 4000%! The high interest rates quickly add up and a small loan can end up costing a significant amount if you borrow for longer than a few days.
Unlike other loans or a credit card you must repay your quick loan back in one lump sum! As this can add up to several hundred pounds in one go this is often difficult for many people and it can be easily to just not have enough then be charged penalty fees and damage your credit rating. Some loan companies may offer their customers the chance to defer loan repayment if they just pay the interest costs in the first month but this can be an expensive option.
If you miss any payments on your payday loan this will be recorded on your credit report, damage your credit rating and will make it more difficult to acquire any credit in the future.