Despite the growing popularity of bank credit cards, many people are still actively using the services of microfinance institutions – payday loans or at least are thinking about taking the first loan. It would seem that you can easily get either a debit card with a credit limit or a credti card with a grace period of 30-45 days. It would be much more profitable.
Do not forget that lending by applying to microfinance companies has its advantages. For example, it is not always possible to borrow even an insignificant loan amount if there have already allowed delays in payments, albeit for a few days. In this case, the bank will strictly assess the portrait of the borrower. And there no chances of obtaining a mortgage or car loan. For this reason, people continue to use online payday loans Illinois, although in many cases this may be less profitable.
The main reasons why online payday loans remain popular are as follows:
- you can borrow money online around the clock and use it for whatever needs;
- you can improve your credit history;
- you can get a loan even if you have a bad credit history or no credit at all.
Other benefits of payday loans
- You can apply for a loan if you are at least 18 years old. However, the age restrictions across the USA may differ. You can easily find out loan rates and terms in the city you reside in using online portals. Thus, if you reside in Waukegan, you can quickly find the necessary information about payday loans Waukegan IL. The will page will be also useful if you need information about licensed lenders in Waukegan, their ratings, and user reviews;
- If the lender has in-store locations in the city or throughout the country, you can borrow money in cash. This is convenient if you prefer personal visits to financial institutions. Besides, in this case, the lender will issue money immediately;
- There is an opportunity to borrow $100-$1,000 even if you have informal employment or an alternative source of income (pension, social benefits, scholarship, etc.). This is very good because in most cases credit limits on cards are insignificant and directly depend on the movement of funds in the account for 1-2 years, on the borrower’s age and employment;
- The process involves no collateral and paperwork, To get accepted, you only need to be a US citizen or a permanent resident, have some kind of identity verification, and have an active bank account in your name.
Are there any disadvantages of taking out payday loans?
Payday lenders provide a very convenient way to get short-term ”fast cash,” but their interest rates are much higher than those of traditional loans. Indeed, many prefer to take out bank loans or credit cards. But this only works if a person is officially employed, has a good credit history and no current loans. Besides, he or she must be ready to wait for several days to get approved. If everything is ok with your employment and credit history, it is really worth considering the bank’s offer.
Summing up, we can point out the following cons of payday loans:
- Higher interest rates than those in banks;
- Short loan periods (often up to 30 days);
- Limited loan amounts: $100-$1,000.
Are payday loans profitable?
Life situations are different, and therefore we list the cases when it may still be profitable and not risky to get a payday loan online:
- If there is no other way to get money. For example, banks do not approve your application, and it is very expensive to withdraw funds from a credit card. In this case, the service of a microcredit company may come in handy. Payday lenders are ready to issue loans to any categories of applicants;
- You do not pass even a soft credit check initiated by the bank, which deprives you of any chances of obtaining a loan. In this case, the only way is to apply for a payday loan;
- If the company offers favorable conditions for new borrowers. For example, you have found a 20% discount promotion. Often, new borrowers are generally exempted from paying interest, no matter what amount of the loan they apply for;
- If there is no other way to improve your reputation as a borrower. For example, you made a mistake by not paying off the previous loan on time, and now your task is to get a mortgage or a car loan. In this case, you will have to take out several payday loans in a row. With their help, you can improve your credit history provided that you repay them on time. As soon as you increase your credit score, you will be able to get a home loan or a car loan.
Why do Americans continue to use payday loans instead of using credit cards?
In some cases, this is not possible to get a credit card, especially if you are a pensioner, self-employed, a student, or a housewife. If a loan is urgently needed for medical treatment, vacation, car repair, home improvement, education, or to invest in starting a business, there is often no alternative way out. At the same time, you must be sure that you will be able to repay your loan in a timely manner. Otherwise, a payday loan from a microfinance institution may become very expensive and you will not be able to overcome your temporary money difficulties, and you will get into deeper debts and troubles. An excellent illustration of this can be the numerous situations when people take out payday loans for starting their own business, and in the end, they spend money on something else.
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