A type of loan that has garnered quite a lot of good and bad attention is same-day loans. People have started seriously considering this loan option, and many have applied and received the loan.
While many people talk about how beneficial the loan is when it comes to getting immediate cash to sort out urgent needs like groceries, repairing things, paying an unexpected bill, etc. Some have also talked about its downsides.
The good thing about this loan is the ability to apply for and receive loans same day. This feature is essential, especially when you urgently need money.
Getting this loan quickly is essential, which is why the name was formed. Payday Loans UK has helped those looking for this loan to receive from suitable lenders for them. They also make sure that the process involved is relatively straightforward to follow by applicants.
So, what are the pros and cons of this loan? Knowing this information on this loan will help you make an informed decision on going ahead to receive it.
Pros of this Loan
Application is relatively easy.
The perks of applying for this loan are how easy the process is and how you don’t need to go through a lengthy application process. An agency like Payday Loans UK makes sure of it.
All you need is to ensure you have a means of identification, you’re up to the legal age, you have a means of repaying the loan, and you’re suitable to apply.
Also, applying from anywhere makes it easy for people who wouldn’t want to physically go to the loan agency because they can do it with their smartphone or laptop.
Receiving the loan the same day
The ability to receive the loan the same day you applied significantly attracts borrowers. You are filling out your bank details while applying, enabling the creditor to credit your account when it is approved, and you receive it under 24 hours.
This loan is one of the most accessible quick loans one can get to take care of financial responsibilities. This is unlike going to a bank to get a loan and going through much stress to receive approval and the money.
Collateral isn’t required.
Unlike most loans people apply for, collateral is not needed when you apply for this loan. This helps to calm most people’s fear that they will lose the assets they used in applying for a loan when they default in repayment.
Most loans require using your house, vehicle, or other assets as collateral before you’re given the loan. They even conduct a valuation on the assets to know if they can get their money in full if it is sold.
Here, you only need to ensure that the details you filled in were correct and that you have met the essential eligibility requirement. This makes it easy to get the approval you want.
A credit score is unimportant.
One of the good sides of this loan is that you don’t need a perfect credit score to gain access to this loan. Most creditors don’t even request your credit score, and those who see it do not let it interfere with their decision.
A creditor only needs to know that you can repay the loan as at when due to go ahead in giving you the loan. This benefits those with lousy credit who still need to take out loans to solve their issues.
Cons of this loan
The interest rate is high.
It is no news that the interest for this loan is ridiculously high because creditors know they have a short time before you repay the loan; they want to maximize profit effectively.
Reading up on this loan and going through the terms your lender places on defaulting when it comes to paying this loan will help prevent you from paying more than you thought or entering a financial mess.
Debt cycle
This loan has caused many people to fall into a debt cycle unknowingly. Initially, they may borrow an amount they think they can pay up when their salary arrives. Something happens, and the default in repaying the loan at the slated time, the fees for that is added, and before they get a complete grasp on what is happening, they are in more debt than they wanted.
Some borrowers will get a loan or borrow money to offset the current loan, then get another way to pay the one they got, and the eternal cycle continues, which is sometimes difficult for the borrower to stop. This loan is a significant drawback, and it doesn’t seem to end anytime soon.
Creditors can access your bank account.
Another major disadvantage of this loan is that your creditor has access to your bank account, and they can easily make a withdrawal of the money owed when your salary arrives. In most cases, this contributes to an individual having a bad credit rating, affecting them when they want to get a traditional loan.
Freedom to borrow as you want
Giving creditors the freedom to borrow as much as they need is another drawback of this loan. There should be limits on what a creditor should give a borrower because not having limits makes borrowers get more than they can pay back, which leads to them getting into more debt.
Creditors are eager to give out loans because they know the interest they will benefit from and how much they can gain when a borrower defaults in repayment. But, this often capitalizes on a borrower’s ignorance that they may run into more debt if they are not careful about how much they are getting.
Final thoughts
This loan often comes in handy for people who need urgent financial help. It has, however, created significant problems for borrowers who don’t pay back their loans in time because of high-interest rates and borrowing more than they have the means to pay back.
Contact Payday Loans UK to get the best terms and offers from creditors so you don’t fall into the debt trap.
