In today's climate of economic
crisis, there is often a need to obtain cash to meet immediate need. Personal
financing companies have started offering online payday loans to meet the needs
of these cash-strapped consumers. These loans are obtained over the Internet,
and are due on the next payday.
There are advantages and
disadvantages in obtaining online payday loans. Due to the short-term nature of
these loans, they are often processed much faster or otherwise, a person's
salary would be available thus negating the need for the loan. Also, the
amounts are much smaller principal as they are based on a person's salary.
Among the disadvantages is that these loans have a high interest. Because of
the "small" principal, the interest can be deceptively low, but these
cost up to 30% of the loaned amount if paid on the next payday, and up to 650%
annually. As security for the loan, the creditors often ask for a post-dated
check or electronic access to a person's bank account. This can increase the
risk to the borrower as both the bank and the creditor can claim for fees if
there are no funds available on the date of the check.
All in all, one must weigh the risks
and benefits when obtaining this kind of loan. Among the factors to consider is
one's own capacity to pay, and other probably sources of cash such as friends
and family who may be willing to lend money. When no other alternative is available,
then online payday loans can be provided by personal finance company.
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