Payday loans are the answer to a lot of your problems when you are looking for a quick fix to your monetary problems. It is possible to fall short on some bills and utilities. There are so many situations when you can run into such situations. It is possible that you are not able to pay the installments on time. You will become a defaulter if you fall short on any payment of your loan. This is also possible when you are not able to make the credit card payments on time.
If you become a defaulter in any of these situations, your credit score gets affected negatively in such a situation. This is the last thing you want to happen. It can increase the rate of interest on your installment loans. More importantly, you will not be eligible for any more loans if you do not have a good credit score. This is where payday loans come into the picture. You never know when you may run into such a situation. You need to keep payday loans as a ready option available for you in times of dire need.
Why do payday loans have such a high interest rate?
Payday loans are not the same as installment loans. There are major differences between them, even though they function on the same concept. They are generally used as a last resort by many people because it is not possible to get loans for such small amounts all the time. More importantly, the bank may turn you down if you have bad credit. Even though they are a type of loan, they become fundamentally different because of their rates of interest and the time in which the loan needs to be paid back in.
They usually have higher rates of interest because the recovery time for such small loans are relatively smaller. The organizations need to recover these costs quickly and within a few weeks alone. These are meant to be short term loans for quick payments for when you are falling behind on smaller payments. Since the interest rates on them are higher, they are recovered quickly as well. This is why the payday loan is not more than half of your income. Your pay stubs are the most important document when you are trying to get a payday loan.
Is it easy to get payday loans?
You do not necessarily need to describe why you need the amount for, as opposed to banks. You need to provide the bank with a lot of documentation when you are applying for a loan. This is not the case with payday loans. Money Wise understands how and why you are there. They do not want to delay the process for you any further. This is why the payments through payday loans are quick and done in one go. There is no waiting period and all the funds are released in one go. This may not be the case with installment loans all the time.
It is very easy to get payday loans because there is hardly any paperwork. More importantly, you will be able to get these loans with a bad credit score too. The interest rates are so high to ensure that you quickly pay these small sums of money back. The amount is not more than half of your income anyway. It is never a problem to pay them back as fast as possible.
If you are to borrow $500 from a payday loan, the interest rates will be generally high and your payment for them will look a little like this.
| Length of Loan | Interest and Fees | Total |
| 2 Weeks | $46.25 | $546.25 |
| 1 Month | $92.27 | $592.27 |
| 6 Weeks | $138.05 | $638.05 |
| 2 Months | $183.59 | $683.59 |
| 3 Months | $273.95 | $773.95 |
| 4 Months | $363.39 | $863.39 |
Due to their high interest rates, they are only used as a last resort and in emergencies only. The rate of interests depends on the state you live in and the personal information you provide organizations like Money Wise with. They are inherently short term loans. In case you do not remember that, the time period you are supposed to pay these payday loans back shows that these are only emergency funds. The only aspect you have to take care of is ensuring that you have your pay stubs or any other proof of income. That is what will determine the amount of loan that will be sanctioned to you.
Concluding About $500 Payday Loans Online
Yes, the interest rates are high. However, sometimes, you just do not have a choice. You have bills to pay that cannot be delayed. Even if you need the funds for a social emergency. There could be a wedding that you cannot avoid and need funds for the whole trip. These are moments that you cannot escape. This is where payday loans come into the picture. Your life cannot and should not come to a stop just because conventional banks did not come to your aid.
These loans are inherently supposed to be short- term. They work to get you in times of need and are not the same as installment loans. They are the last resort when you are short on an important payment like your electric bill or another installment of a loan with the bank. The possibilities are endless. You never know where and how you will need these emergency funds. It is important that you always keep this as an option.
