Advantages and Disadvantages of Instant Payday Loans

Without the provision of collateral, an adverse credit history makes it far more difficult to borrow money from a lender. However, it may be possible to get instant payday loans for up to $1,000, regardless of past credit indiscretions – missed payments, defaults, active debt solutions and even chapter 7 bankruptcy. When a member of the family is unable or unwilling to help out, a cash advance payday loan could provide the perfect solution.

Advantages of Instant Payday Loans

  • Guaranteed Cash Loan. An application will be approved, provided that the applicant is a U.S. citizen, over 18, in full-time work, has 2 forms of identification and a personal checking account.
  • No credit scoring. Few banks will approve loans for people with bad credit due to the use of credit scoring, but instant payday loans are guaranteed to be approved.
  • Flexibility. They can be attained from a local shop or online.
  • Quick approval. If the basic eligibility criteria for a payday cash loan are met, it will be sent via bank transfer within just 24 hours.
  • Emergency situations. Loans for poor credit are available for any purpose. Although there is a downside, an advance could help to pay the rent or fix a car in order to get to work.
  • Minimal paperwork. Compared to other ways of borrowing money, there is less administration involved with a guaranteed cash loan from a payday lender.

Disadvantages of Instant Payday Loans

  • Rate of interest. The high default rate among customers means that the rate of interest must reflect the risk. It costs up to $25 to borrow $100 for a month. However, many states have placed an upper-limit on the maximum APR that customers can be charged. Other have banned them entirely.
  • Short term cash loan. Loans for people with bad credit are only available for up to one calendar month. This means that it isn’t suitable for debt consolidation purposes.
  • Cycle of dependency. Most customers are a source of repeat business. This is because repaying the principal and any interest that has accrued leaves less money to pay bills the month after.
  • No job. Cash advance payday loans aren’t available without a full-time job. There are loans for unemployed people available from specialist lenders.
  • Debt problems. Easy credit regularly leads to the purchase of goods and services that aren’t genuinely needed. Spending tomorrow’s money today is rarely a prudent strategy.
  • Collection agencies. Unless personal debt is repaid punctually, interest and charges will continue to accrue. In order to recover the balance, debt collection agencies are likely to be used.

Are Payday Cash Loans Worthwhile?

An instant payday loan can help someone out of a short-term financial hole, such as paying the rent or mortgage. Provided that the customer has a means of repaying the debt, such as a bonus or over-time payment, it can provide a genuine financial lifeline for that person. The problem with a loan for people with bad credit is that it attracts a high rate of interest. Failing to repay the debt punctually will lead to further interest and charges so it is inadvisable to borrow money unless there is a way of repaying it. If struggling with debt, seek advise from a non-profit debt counseling service.

How to Update Balances on Your Credit Report

When you wish to purchase something through a loan your credit report may affect your ability to do so. You may have trouble trying to obtain a mortgage, bank loan, credit card or even home necessities such as an Internet provider, home telephone or cell phone contract.

There are three national credit-reporting agencies that hold credit information about you. These have information of your spending habits and also your ability and willingness to repay as well as how much you still have outstanding. They are Experian, Equifax and TransUnion. People who you will go to obtain credit may use one or more of such agencies to gain information about you and this will determine as to whether they are willing to allow you credit according to the results. Other reasons for the balance being different than expected could be down to credit card fraud. If this is suspected you immediately need to contact your creditor as well as the credit reporting agencies to let them know. As we are all human it can sometimes be that an inputting error has occurred. Ensure you keep receipts and statements of all transactions so that this matter can be dealt with as soon as possible.

Your credit report is updated depending on your creditors; it is usually updated each month, on different days depending on the agency, yet it can happen as infrequently as every 90 days or quarterly, this is the reason why you can have paid off creditor yet it does not show on your credit report balance immediately. As the three credit agencies do not communicate you will find that the scores can differ between them. The information on your credit report will differ depending on how late you are to send a payment, some will choose not to at all. Depending on the creditors policy, it can be 30 days or more late before they decide to report it.

If you read your balance and it does not add up you need to get proof of payments that seem outstanding on the report and send them by letter to the credit report agency/agencies then wait for 90 days for the balance to be updated. If you know you have outstanding balances but wish to improve the balance on your credit report you can pay off what you owe then as with balances that have not yet been updated you can send proof of the payments and remaining balance, if any on the account by letter, this will then be updated within 90 days also.