Short-term debt, such as a payday loan is better in many ways. What is a payday or a cash advance loan? If you are a little short of cash or in an emergency and need funds to see you till the month end, you can approach a payday lender for this money. The money is directly credited to your bank account, usually within 24-48 hours.
You have to repay once you receive your next pay check. It’s a great help when you need to make urgent car repairs, pay utilities, or make some other urgent payments. These cash advances are typically for short terms, for 2 to 3 weeks, and the amount is usually between $300 and $1500. The payday lender won’t ask you why you need the money.
The Future Is Uncertain
Most of us can do with some extra money. That is why so many people take loans for a variety of reasons. Taking a loan is always a big decision because when you do, you are making a commitment of paying off the debt, plus the fee and interest, within time. The term of the loan is as important as how much money you have taken as the loan.
We all assume the future is going to be better than today, but that is not always the case. Things happen. Businesses lose money. The entire industry is sometimes replaced by a new trend or a technology breakthrough. People lose their jobs. There are bad times. In fact, the experts are already predicting there could be mass-scale job loss in most sectors because of the growing threat of robotics and artificial intelligence, and that’s why the idea of the “universal basic income” has been mooted.
We have to take responsibility of our future until that happens. Do you know what is going to happen after 10 years? Will your skills and knowledge still be relevant? Are you sure you will earn enough money in 10 years to pay off the growing expenses and still save for the future? These are all serious issues that need thought.
It may be very risky to take a long-term loan for say 10 or 20 years when you don’t know what the future is going to give you. Take a short-term loan instead, such as a payday loan. Let us now delve deeper into the advantages of short-term lending.
The Advantages of Taking a Short-Term Loan
1. Speed – You can get short-term finance, like a payday loan much faster as compared to long-term loan. No long queues. No complicated paper work to submit and sign. You may even apply online from the privacy of your home. Nobody needs to know that you are a little short of cash. Your application is reviewed, approved, and the money is transferred to your bank account directly within 2 to 3 days.
2. No Collateral – There is no collateral for short-term finance such as a payday loan. This means, people without any collateral can also get a loan.
3. Risk – There is considerable less risk with short-term debt. A payday loan, for instance, is just for 2 to 3 weeks and the amount involved is usually between $300 and $1500. In contrast, long-term loans are for thousands of dollars and are for many years. Thus, you have lower risks with payday loans.
4. Stay In Debt For A Shorter Time – It’s not a good feeling when you are in debt for several years. Often, the priority is always to pay off the monthly debt first before doing anything else. This requires making compromises, and when done over time, it brings about lifestyle changes. There is no such thing with short-term debt. Your entire loan can be repaid in a matter of weeks so you can go back to your old lifestyle.
5. Less Interest – If you are in debt for a longer time, this invariably means that you will end up paying more money as interest, even though the rate with short-term debt may actually be slightly higher. Often, just the interest amount can go into hundreds and even thousands of dollars, depending on the amount you originally took as debt. So a short-term debt saves you money. Imagine how much you could have accomplished with all that money. Simple truth – Pay back quicker, accrue less interest, save more money.
6. Emergency Funding – A payday loan is a great way to fund an emergency. With long-term debt, the application process is lengthy. It can sometimes even take weeks and months before you finally have the money, and by that time, the reason why you needed the money may not be there anymore. With payday lending, on the other hand, you will have the funds in 2 to 3 days maximum. So you will have the money just when you need it.
7. More Predictable – It is almost impossible to make a correct estimate of your financial condition in the distant future. There are recessions, job losses, technology upgrades, and so many other risks. No one can be sure of the economy in say, 20 or 30 years. It could be a different world. However, with long-term debt, you will still have to pay back the debt, no matter what. That is too much risk. It is way easier to plan and budget for the short-term.
8. Less Stress – Stress can be killing. We are all too stressed these days, because of so much pressure at work and home. Long-term debt will add to that. Will I be able to repay in time every month for the next 15 years? Will I receive those embarrassing calls at home and work if I fall behind the payment? Will they take away my car or home? Too much stress can cause many health issues as well. Try to lead a stress free life by avoiding long-term debt if you can. With short-term debt, you will be out of the burden much quicker.
9. Simplicity – Short-term debt, such as a payday loan is way simpler. Apply online, get approved quickly, and you have the money fast, just when you need it. Make your emergency payments or use it for whatever other purpose. Pay it back on time, and move on. Problem solved. Long-term debt, on the other hand, is so complicated that it will often change your lifestyle and preferences.
A payday loan is a great practical solution to your current cash flow situation. All you have to do is apply to get the money. The approval process is not as complicated or strict as long-term financing. If you have a sudden situation and need some emergency cash, this is the way you can get the money. This is precisely why payday lending has become so popular in the United States over the years. In fact, not just the US, there are now payday lenders all over the world that are helping people in need.
Critics say the interest and fees are higher than many other types of loans. But do keep in mind that this is the case with all types of short-term finance. With payday lending, you will only be taking a few hundred dollars and that too for a couple of weeks, so the total amount you have to repay is never much. What you get in return is much more – urgent cash when you need it, and the ability to make emergency cash payments, perhaps to buy medicines, make car repairs, or pay off the utility bills.