short term loans

Are Payday Loans Bad? 

We have all been there. Something unexpected happens during the month and we realize that we are not going to make it through the month financially. With the petrol prices and general cost of living at an all-time high, more and more people are making use of payday loans in South Africa. But are payday loans a bad thing or a good thing? Let’s have a look.  

What is a Payday loan?

Payday loans are short-term unsecured loans that are specifically there to give you access to money quickly when you need a little bit of a financial boost to get you through the month. These loans are repaid after a week or two weeks, then the repayment amount is deducted from your account. 

Even after careful budgeting and responsible spending, we can still find ourselves in a situation where something unexpectedly pops up like a doctor’s bill or unexpected pet emergency. Then you find yourself stressed and strapped for cash. This is when payday loans can be a solution. Payday loans are fast and convenient and will be able to help you out if you find yourself in a financial fix.  

One of the best things about payday loans is that you can use them for any reason. Whether you need money to fix your car or home or just want to buy some new clothes and shoes, these loans can help. You’re not limited to using the money for emergencies only. This is a great way to get some extra cash when you need it without having to worry about why you’re getting it. So, an advantage of getting an online payday loan is that there are no restrictions.  

You can use the money for anything you want, whether it’s an emergency expense or something you’ve been wanting to buy for a while. For example, if you need a new dress for an event that suddenly popped up, there are no limitations on what you can do with the money, which gives you a lot of flexibility and options. 

Things to Consider

Something important to note is that this loan does have high costs, and should not be used if you have a huge cash flow problem or are already drowning in debt, or have other major financial difficulties. By taking out another loan, your expenses will just go up again, setting you up for another month of financial strain and stress.  

In fact, if you already had several debit orders before you took out your payday loan, the repayment could deplete the account funds that you had put aside for another debit order and repayment of debt. A bounced debit order would almost certainly put a mark on your credit history, which would have a negative impact on your credit score, making future loans even more costly. 

The Benefits

Let us look at the major benefits of a payday loan and how it can help you.  

  • Easy access: This is one of the biggest advantages of a payday loan. It is super convenient and very quick to access. Unlike other traditional lending options, you can apply online and the money can be in your bank account on the same day. This is exactly what is needed as most people who get these loans need it for a quick unexpected emergency like emergency home repairs.  
  • There are fewer requirements: Another reason why payday loans are an attractive option is the fact that the criteria are not as strict as other loan options. Even if you have poor credit history or your income is low you can still qualify for a payday loan. The whole point of this loan is to make sure that it is affordable to clients immediately when they need it.  
  • It is an unsecured loan which means it is possible for borrowers with a poor credit history to get approved for a payday loan without needing to use an asset as a security. Payday lenders offer unsecured borrowing which means you are not directly putting your personal property at risk. 
  • More manageable: Most borrowers choose to manage their borrowing online. This is one of the payday loans benefits that can make them easier to control. When you make an application for a payday loan, you are typically given access to a personal online account. When you log in, you can see your current loan balance and any repayment dates, as well as having the option to make an online payment. 

Finally, one of the best advantages of getting an online payday loan is that it’s a safe and secure way to borrow money. These loans are regulated by the government, so you know that you’re getting a quality product. And since the entire process can be done online, you don’t have to worry about giving out your personal information to shady companies and dodgy people who want to take advantage of you. You can be sure that your data is safe when you use an online payday loan lender. 

So, if you’re looking for a quick and easy way to get some extra cash, an online payday loan is a great option. These loans come with many advantages, such as convenience, speed, no credit checks, and more. So, if you need some extra money, be sure to consider getting an online payday loan. However, just like any other financial decision, you need to think it through and make sure that it is the right option for you and speak to a financial advisor if you are finding yourself in financial troubled waters. 

There are plenty of loan options out there, and it makes sense to take the time to review them. You don’t want to make a hasty decision out of desperation. Taking out any loan- does not matter how big or small, is still a big decision, and should be treated as such. When you’re finally ready to decide on borrowing money, you need to be absolutely sure you’re going with the most flexible and suitable lender for your situation. 

*Disclaimer: While we have done our best to provide the most up to date and reasonable information, we are not and do not claim to be financial professionals. It is often best to speak to a registered financial professional before making decisions.