Is a Payday Advance the Right Solution?
It is not unusual in this economy to find that you need money to cover unplanned expenses for which you may not immediately have the money available. One of the ways that many people have found that they can accomplish this is through the use of a payday advance or payday loan.
What is a Payday Advance?
Canadian payday advance loans are loans that are paid back within a matter of a few weeks or months at the most. If you find yourself in an emergency situation where you need money fast, using a payday advance may be your best option.
Advantages of Payday Advance Loans
One of the biggest advantages of taking a payday advance loan is that it is easy to qualify for this type of short term loan. Often you can get approval within a matter of less than 24 hours, especially if you go through an online loan service.
Payday advance loans also have easy qualifying requirements. In most cases, they require you to have steady employment, an active bank account and a permanent address. In some cases you will be asked to also have a landline telephone and be able to show proof of employment and income.
Once you are approved for a payday advance loan, you usually have access to the funds within a short amount of time. In fact, many lenders will direct deposit the funds right into your bank account.
Disadvantages of Payday Advance Loans
There are many criticisms of the payday advance loan industry. Lenders of this type of loan are notorious for charging extremely high interest rates even though the loan is for a very short time. While recent regulations on Canadian payday loans have gone into effect that limit the amount of interest that can be charged – limited to 60 percent per annum – it is still not unusual to discover that lenders may be attempting to charge much higher interest rates. One of the ways lenders get around interest rate regulations is to charge additional fees and service charges on top of the principle loan amount.
Another criticism of the industry is that payday loan companies is that it is easy to spiral into financial ruin by taking out short term loans. If you are unable to meet the repayment deadlines, then you will be charged additional finance charges and additional interest. In some cases, your already high interest rate will be raised even higher.
When to Use a Payday Advance Loan
With all that said, there are times when using a payday advance loan can be a good option. For example, if you are working to retain a good credit rating, using a short term loan to make a payment that is due can be a good way of avoiding a late payment and additional late payment fees.
Another good time to use a short term loan is when you do not have the time to wait for approval for a conventional bank loan. Conventional bank loans can take weeks to process. In comparison, payday advance loans can be approved within a matter of hours.
Before you decide to borrow short term money and use a payday advance loan, think carefully about all of your options. Be aware that you will be paying a very high price to borrow the money for only a short period of time. Also know that it is important for you to be able to pay back the loan within the time limit set by the loan terms. If you find that you need to use this kind of loan, look for a reputable lender and carefully read all of the loan documents before signing them and agreeing to the loan.