Payday Loans: The Pros and Cons You Need to ConsiderFeb 18, 2021
Payday loans do not have the best reputation as they are often dubbed as one of the biggest things that could hurt a person’s finances. True, there are some stories about people who “drowned” when they got their payday loan, but that doesn’t mean it’s going to happen to you. This also means that there’s no reason for you not to consider taking out this type of loan.
To help you understand this better and for you to be able to make the best decision, you must have more information regarding this loan. As such, Hoopla Loans, regarded as a reputable loan provider in South Africa, shares with you the pros and cons of Payday Loans:
Advance Loans, Explained
Before any discussions on their advantages and disadvantages, you must first understand what Advance Loans are.
Advance Loans is financial help (typically just a small amount of cash) to tide you over until you get paid by your job. There are quick online payday loans in South Africa that you can get approved for, and the release of the cash is speedy. However, the caveat here is that many of those loans come with significantly higher-interest rates. You will also be required to write a cheque in advance as collateral.
Now that you have a basic understanding of what payday loans are, it’s time to know their pros and cons:
Pros of Advance Loans
1. Good for Emergencies
This is one of those emergency loans that could get you the amount of money you need in the shortest time possible. Some reputable companies like Hoopla Loans can get you a advance loan through an online application that’s easy and convenient to apply for. This is especially helpful when you need to pay off medical expenses or house rent.
2. Possibly a Reliable Supplement to Your Income
This largely depends on your payment record on your first or previous advance loans. It means that when you can pay your loans on time, you can count on this type of loan to get you out of financial difficulties in the future.
3. Customisable Amounts
Another plus for payday loans is that you are not required to take out the maximum amount set. You can simply take the amount that you need.
Cons of Advance Loans
1. High-Interest Rates
Lenders typically make money from the interests on the loans. If they don’t charge high, they will hardly make any money with short-term loans like advance loans. Because of this, lenders charge interest rates high enough from the lender to enjoy a good return on investment. The interest rates of advance loans are comparable to that of a student loan. As a result, if you cannot pay back the loan as scheduled, you could easily find yourself drawing in that high interest.
2. Risk of Getting Into a Never-ending Loan Cycle
Advance loans have high-interest rates and short-term payment periods. When you find yourself in a position where you don’t have enough cash to pay your loan on time, you might get tempted to get another similar loan from a different lender. This could go on until you’re in a vicious cycle that you can’t get out of.
An Advance Loan’s capacity to become a blessing or a curse depends on how responsible you are as a payer. If you are positive that you can pay the money back straight away, then the loan can help you when you need cash fast. But if you are having doubts about your ability to repay it on time, then take some time to think about it before you apply for a loan.
Hoopla Loans is one of the most trusted brokers for advance loans in South Africa. We process applications online through our reliable system and offer competitive interest rates and flexible payment terms. Get in touch with us today to learn more about our loans or apply for one today!