Payday loans are short-term loans that also charge a lot of interest and are meant to provide a quick way to get money for those who find themselves in an emergency before payday. A small amount is always the amount of money borrowed, between $100 and $1,500, and the payday loan borrower will meet the cost through the whole of two weeks or get a payday loan on the next payday.

What Are Payday Loans?

They usually issue the borrower a check or permit the creditor to make automatic withdrawals on the due date for the amount of the loan and the fees. On the specific date, the lender draws the check or withdraws the money from the borrower's account. No money to pay pack when the borrower has to. The borrower has the option to delay the loan repayment to the next term, but they will pay more in interest and extra fees ultimately.

Pros and Cons of Payday Loans

Pros:

• Quick Access to Cash – Payday loans are the absolutely fastest ways to get the cash you need as the loan approval and funding are usually done within the first 24 hours.
• Minimal Requirements – In general, the main criteria to apply is proof of income, having an active bank account, and a valid ID.
• No Credit Check – In most cases, a payday loan lender does not do a background check, and so, even most of the people who have low scores can get such loans as well.

Cons:

• High Fees and Interest Rates – Payday loans have APRs as high as 400% in some cases and charge very high dollar-costs.
• Short Repayment Period – The short repayment term becomes a barrier, and most borrowers cannot afford the loans without additional ones.
• The risk of being caught in an endless debt cycle - The majority of debtors get into a cycle of repeatedly borrowing payday loans to cover the unpaid ones, and turning the money into a financial nuisance, a substantial problem to be solved.

Alternatives to Payday Loans

If you don't have time for a loan but you don't want to pay a big amount for payday loans valid alternatives that you can choose are described below:

• Personal Loans – A lot of banks and online lenders provide customers with a small amount of money in the form of a personal loan with an interest rate that is much lower than that of a payday loan.
• Credit Card Cash Advance – In spite of the still high cost, this is the best alternative to go for as compared to a payday loan where the debtor does not need much cash to finance the up-front cost of any unexpected purchases.
• Emergency Assistance Programs – Many nonprofits are on the local level and provide money relief to people in need.
• Employer Paycheck Advances – It becomes possible to get an early paycheck from the company you work with as a very good benefit.

Payday loans though are instant relief solutions during an emergency but owing the short repayment terms and high costs, they are risky. Prior to taking out a payday loan or compare alternative financial solutions, which offer affordable repayment terms that feature low interest rates. It is always imperative to thoroughly understand all the loan terms, and have a well-thought-out plan to make the repayments on time to prevent you from falling into the cycle of debt.