Benefits of a Payday Loan over Traditional Loans

Sunday, May 10, 2009

A payday loan is a short term loan of a relatively small amount of money to carry one over until payday. It is expected that these loans are no greater than one month. When other loans just would be too much, a payday loan can be exactly the boost one needs to survive until payday.

Unlike traditional loans, a payday loan does not normally require a credit check or any collateral other than a personal check to hold until the date the loan comes due. Most payday loan providers only require a valid address and proof of employment in order to secure one of their loans.

It is important to be aware that these are nontraditional loans are for a very short term. The APR interest rate for such loans is quite high when compared to a traditional mortgage. However, in terms of convenience, it may very well be worth the higher interest to satisfy a short term need without the hassle of dealing with a bank and trying to arrange to mortgage something to secure the funds.

The process of acquiring a payday loan is really very simple. One must fill out an application with information that includes one’s address, place of employment with address and phone number, bank that one uses (where the money will be deposited), and other minor details used for identification purposes. In most cases, once one is approved for a payday loan, it is a simple matter for future loans without having to go through all this again, unlike a traditional loan that requires a new application and credit check to acquire each time. The only thing that is required is that a client needs to make at least the minimum payment each period. It is generally better to pay off the entire balance of the payday loan as soon as possible.

Additionally, many companies, such as Ripe Apple, offer an online application and will match the information provided with the best possible online pay day lender. All one needs do is fill out the online application and wait for an approval email from the best matched company. Once approved, the money borrowed will be placed in one’s bank account so it is available for use. Once credit is established and customer rapport is built, it is generally easier to get additional funds. Just send a request for funds and the date for repayment, the money will be transferred to your account.

A payday loan is more expensive than traditional loans in some ways. Mostly, though, the fees are quite reasonable for the convenience of borrowing a small amount for a short term. Most do not require a credit check, just proof of employment. No collateral is required and the application and money transfer is handled online. These features can often make a payday loan more beneficial than standard loans when one has a short term need for a small amount.