Some important benefits of payday loans

Although payday loans have some really serious flaws, they also have some very important advantages. Some of them need to be carefully considered when you think about funding of your own budget. We are going to talk about them in the next few lines.

It is important to make a note that this article is not written to prompt you take a payday loan. Here we try to make a correct overview of these type of loans.

What are some of the most important advantages of payday loans?

  • You are keeping your financial records unseen: When you apply for a regular loan, your financial record will be very carefully analyzed by the banking agent. So, if you have something you want to keep only for yourself you can’t apply for an ordinary bank loan. This is definitely not a problem for payday loans.
  • Speed: We all know that payday loans are extremely fast. With just a phone call or few mouse button clicks and you would have the needed amount of money.
  • Spending money for what you want: Unlike many other types of loans if you take a payday loan nobody cares about what you are going to spend your money. You can do it as well to cover the bills or to pay for a weekend trip. Whether it is wise to do the latter is another question.
  • Easy approval procedure: This is something that payday loans are known with and it really true. Applications could be made only with an ID card without financial research or other delays.

More payday loans tips you could find on

These are just some of the advantages of the payday loans, which distinguish them from the other types of loans. However, it is very important to remember that payday loans have serious disadvantages. So when the time to decide whether to take a payday loan or not come, carefully think about all the pros and cons and only then make your decision.

No more payday loans ads on TV?

A few months ago in the UK has been started an initiative aiming to forbid the TV advertising of payday loans. The request was at least to stop such ads until 9 PM with the main idea to limit the influence over the young people under 18. There were some studies, which discovered that teenagers are among those who are most possible to take a quick loan or to make someone else to do it for them.

Meanwhile, in Bulgaria have been some voices with a demand for complete ban on advertising of payday loans as a financing option. Such proposal could be heard even from the highest levels of bank management. The reason is that such ads target people without adequate financial knowledge and force them to take payday loans with the promise of easy money. This, according to the banking institutions leads to a drop in the trust in the banks in general, which damages the banking business and financial environment.

The lack of good legal framework allows companies, which offer payday loans to show these type loans as an easy solution and access to resources. At the same time, in the ads they don’t say anything about the amount of interest rates and penalty fees. Apart from that, studies made by the banking sector showed that the majority of people who applied and being approved for payday loans are young people who use this financial instrument to buy goods and services which are far from essential. This shows that they are definitely influenced by the media advertising, which leads to the initiative for stopping of payday loans ads or at least shifting their broadcast in a time zone, which is unpopular among the teenagers.

Whether the solution of the problem connected with payday loans is to ban their advertising or in creating a better legal framework of this type of financial services is debatable. The fact is that payday loans are a financial instrument that can be successfully used to solve certain financial problems. The fact is also that successful management of a payday loans happens only with people who have the needed financial knowledge to fully understand the pros and cons of such loans.

These people can make a reasoned decision about should they or should not take such loan. This itself shows that not the suspension of ads for payday loans is the solution to the problem, but an awareness campaign on the advantages and disadvantages of this type of loans. This is an initiative that certainly must be done as fast as possible.

Disadvantages of payday loans

At first glance, to take a payday loan looks extremely attractive. Without much efforts, with just an ID card everybody could take a small amount of money to cover important and urgent expenses. However, this comes with some serious disadvantages, which is good to be considered before applying for a payday loan.

Extremely high interest rates

Perhaps the most important disadvantage associated with payday loans is the extremely high interest rates, often passing one hundred percent, which these loans have. It should be noticed that these rates are not so easy to be seen and understood correctly, for example, when the loan is not so large. If you take 200 Euros on March 1 and must return 220 Euros on March 20 it seems something small, but in terms of the interest rates this actually is a huge loss for you

Penalty fees for overdue loan

Another major disadvantage connected with payday loans are the penalty fees that financial institutions imposed for delayed payment of the loan. Often, penalty fees are so high that only after several missed payment periods, the fees already exceed the amount of the loan itself. This often leads to a situation where the customer of a payday loan must pay only the interest rates and the penalty charges without being able to start repaying the loan and thus to get rid of him. There are cases in which one finds oneself in this situation for years.

Poorly regulated legal framework

The payday loans are a part from the financial law, which is not yet sufficiently covered and unlike the more general loans, the consumer rights are not sufficiently protected. In practice, this means that when you decided to take a payday loan is better to be very careful about the legal side of the issue and how your rights are protected. This mean to be aware for techniques such as hidden text in the contract, misleading clauses and so on. The best option for anyone who has decided to apply for a payday loan is to consult with a lawyer during the signing of the loan agreement.

Along with its benefits, the payday loans have serious deficiencies and if one is not careful enough is quite possible to run into serious financial difficulties.