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Is It Smart to Get a Payday Advance?

Posted By:  |  May 19, 2014  |  0 Comment(s)

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Many people believe getting a payday advance is a good idea, but is it really the smart thing to do? With each and every payday advance that you end up getting, you’re obviously putting yourself into greater and greater debt. So while you might have more money on hand immediately, you’re putting yourself through more stress by racking up short-term debt. A payday advance is really a loan against your own income; you’ll have to pay this back. Here are some pros and cons of a payday advance, so that you can decide if it’s smart to get one.

We do not recommend getting one. Even in very tough situations, we recommend searching hard for other options first.

Pro: The Payday Loan Paper Work Doesn’t Take Long

One distinct pro of getting a payday advance is how quickly and efficiently the paper work can go through. Much of the time, the payday advance lender just needs very basic information from you. This will normally include information such as your name, your address and your bank account details. In terms of actual time, the whole loan process itself normally doesn’t take longer than a half hour. Then, the money will be deposited in your bank account within a day.

Pro: There Is Not Much Proof Required

Another definite pro of getting a payday advance is that the lender usually doesn’t require a lot of proof from you when you fill out your application. So the process is painless and quick, which can help you get the money you need right away. The only details that you usually have to provide are your proof of employment and some recent paystubs.

Con: The Liability Can Be Hard

When you get a payday advance, you’re normally liable for the entire amount of the loan. The other downside is that, if you do fail to pay the loan back within the terms of the agreement, you’re going to significantly hurt your credit score. That’s why it’s a really good idea to speak with a loan officer before you get a payday advance. You should know what you can afford to pay before taking out an advance.

Con: You Don’t Have a Long Time to Pay Back the Advance

Much of the time, you’re only going to have about two weeks to pay back your payday advance. This doesn’t allow you much time to pay it back. In addition, a loan of this type will also come with a pretty high interest rate. If you do get a payment extension, it means that you’re going to have to pay a lot more than the initial amount of the advance.

In essence, if you will have the money to pay back the loan in a short period of time, and it’s your last option, then there’s no big problem. However, if you have difficulty paying back the loan on time, it can greatly worsen your financial situation.

Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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