Payday loans are the way to pay unexpected expenses

by Ken Smith
What is a payday loan?

Some call it a cash advance loan. Some call it a check advance loan. Still others call it a deferred-deposit check loan. The Federal Trade Commission in the U.S. calls it "costly cash". No matter what you call it, it's the same thing: a small (usually $50-$500) short-term loan with high interest.

Why would you get a payday loan?

You might have had an unexpected medical bill or car repair bill, or you might have to travel unexpectedly, like in the case of a death in the family. Others who need quick cash use it to pay their everyday expenses, like rent, groceries, utilities, etc. Whatever the reason, you need that cash and you just don't have it. You can face this type of situations with out borrowing the money by just getting the payday loan with high interest.

Is a payday loan your last resort? Do you have other alternatives you could explore first? Well, what are the benefits of payday loans? Let's see:

You won't have to go through the hassle of a credit check. You can apply in person, on the phone or on the Internet. The process takes less than 20 minutes. The loan proceeds are automatically deposited into your bank account within 24 hours. It's affordable, at least immediately - you don't have any up-front costs. It's discreet - nobody else is involved. It's secure - your financial information isn't shared with others. Ok, that makes sense. Those are enough reasons to get rid of the stress of being short of cash. It's a "quick fix". You can cover the shortage, and get on with your life. And you'll be able to pay it back next payday, right? So you've solved your problem.

Payday loans are controversial - but they do fill a need

Now we've clearly shown both sides of the argument - and it's a huge argument these days. So which party do you side with? That depends on your immediate situation. If you really just have to have it, and you don't have any other choice, then a payday loan is probably the wise thing to do. At least you'll be able to keep your sanity, even if it does cost you a few dollars.

Payday Loan Terms

Payday loans range in size from $50 to $500, depending on state legal maximums. The average loan term is about two-weeks. Loans cost on average 470% annual interest (APR). The finance charge ranges from $15 to $30 to borrow $100. For two-week loans, these finance charges result in interest rates from 390 to 780% APR. Shorter term loans have even higher APRs.

Reference : Payday Loan Advice