How Payday Loans Compare With Conventional Financing

Payday loans are your best source of help to tide over an urgent financial crisis. There are traditional ways to get instant finance and on the face of it, cash advance payday loans look like any other. But if you look at its merits, you will understand why despite its whopping interest rate, it manages to outshine other loan instruments.

Banks and other financial institutions do help, but they are generally or rather, mostly in favor of giving loans to people who want money for big projects and expensive purchases. Also they take the credit rating of an individual into consideration. If you have bad credit, you may not be able to avail of the loan. For payday loans, credit rating is not much of a concern as long as you have a regular source of loan. The money that is lent in payday loans is between $150 and $1500. Due to the relatively small chunk of money that is being borrowed, it becomes easy to pay back the money.

In conventional loans, you have to go to the financial institution like bank for instance, talk to the loan officer and do the paperwork. As mentioned before, the lenders will qualify people who have a good credit rating or a good record with their bank. There are late payments associated with default payments. Repeated instances of late payments can result in increased percentage rates and liens as well .

Payday loans are apt for emergency situation. These are short term financial resources that can be paid back with the next salary. To qualify, you have to be a resident of US(or the country you are living in), have a checking account (in case you are in US), be at least 18 years of age and have a regular source of income. You should pay your pay check as proof. The proof of identification needed for payday loans include driver’s license, salary slip or military ID. There should be a match between what you say on the form and what supportive documents you provide. You should also know that compared to other conventional loans, documentation is less here. Since a credit check is not needed in payday loans, you do not have to worry about a soft hit or a hard hit on your credit report as well.

It is a great thing that to know that payday loans have caught the fancy of people and there are many who can take advantage of this financial help in dire times without the fear of having their credit application rejected.

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