Though we prepare our household budgets with care, there is often some expense which will crop up all of a sudden. If you set aside a part of the salary, for such situations, well and good, if you have some savings, you can dip into that to meet the emergency. However, if you do not have the necessary cash, you would have to resort to borrowing.
Borrowing from a bank- well, this would take a long time and your need is immediate. Borrowing from a friend- no, you wouldn’t want to do that. What then? There is another convenient option – borrow same day payday loans.
What are Payday Loans?
The term ‘payday loan’ is self explanatory. It is a loan to be paid back on payday- the day one receives one’s salary.
What are Same Day Payday Loans?
When the borrower is given the loan money on the same day he applies for the payday loan, such loans are called same day payday loans.
How are Same Day Payday Loans different from Bank Loans?
- Same day payday loans are unsecured loans. In case of bank loans, the borrower has to offer some kind of security or has to find somebody who will stand as guarantor.
- Payday loans are short term loans while bank loans may be short term or long-term.
- The interest charged by payday loan lenders is very high compared to that charged by banks. For borrowing $100, one may have to repay $130. The APR or the annualized percentage rate of interest is steep.
- Same day payday loans are usually for small amounts ranging from $100 to $1000. Banks do not lend such small amounts.
- Banks do not grant loans without first conducting a thorough credit check. A bad credit history means that a bank will not grant you a loan. Payday loan borrowers are not subjected to any kind of credit check. So even if you have defaulted on loans in the past, it will not make any difference to the payday loan lender. He will still grant you a loan as long as you earn a regular salary.
- It takes a very long time for a bank loan to be approved. In contrast same day payday loans get approval within minutes.
- A lot of paperwork is involved when applying for a bank loan. When you apply for a payday loan, all you have to do is fill an online form and that too will hardly take a minute.
- Once a bank loan is approved, it will take some time for the borrower to actually get the money. But in case of same day payday loans, the loan money is deposited in the borrower’s checking account on the same day.
Small day payday loans are like a godsend for people who need immediate cash. There is no long drawn process nor is there any red tape. The approval is instant and in a matter of hours, the money will be deposited in the borrower’s bank account.
However, these loans have their drawbacks. People, especially from low income groups may borrow these loans on a regular basis and the high interest they pay may worsen their already precarious financial condition.