Need urgent cash but your payday is still far away? You can opt for payday loans and repay the amount once you get your salary. Also known as cash advance loans, payday loans come with higher interest rates and shorter tenure than personal loans.
Read this blog to know how payday loans work, their fees and whether you should opt for such loans.
A payday loan is a short-term loan with a high-interest rate and shorter tenure as low as 30 days. Such a line of credit usually doesn’t have any stringent eligibility criteria. Payday loan service providers usually don’t check a borrower’s credit profile. For this reason, such loans could come with additional fees and charges.
With all its downsides, payday loans could still be of great help if you’re in urgent need of cash but have a steady source of income. Just make sure to pay off the loan as soon as you get your next salary to avoid high interest rates or penalty fees.
Payday loans are just like getting a portion of your salary in advance. All you need to do is show your income proof in the form of salary slips. Based on your income, the lender would sanction a certain amount, which you would need to repay within 30 days.
Payday loan service providers usually don’t check the borrower’s credit profile, hence the risk of defaulting on the loan is quite high. This is why lenders charge high interest rates on payday loans.
Here are the benefits of payday loans:
Applications for payday loans are a simple and instant process for every borrower. However, while applying for payday loans, read the lenders’ terms and conditions carefully.
You can easily apply for a payday loan online using the following steps.
As mentioned, payday loans come with high-interest rates. Depending upon lenders, these can be as high as 30-50%. Some lenders may charge up to 2% on a daily basis, which can add up to an APR (Annual Percentage Rate) of over 700%. This is much higher than the interest rates of personal loans and the APR of credit cards.
You are required to submit these documents to apply for a payday loan:
Even though payday loans are growing in popularity, there are various disadvantages of availing a payday loan:
But don’t worry. Here are a few alternatives to payday loans that can help you during an emergency.
Here are some of the alternatives to payday loans:
But why go for high interest payday loans when you have Navi Cash Loan. Navi offers instant personal or cash loans in a 100% paperless manner. You can get loans up to Rs.20 lakh at attractive interest rates and flexible repayment tenures. All you need is the Navi app and your PAN card. Yes, getting a loan from Navi is that simple!
Arranging funds during an emergency can be very difficult and stressful. Not all individuals have savings or emergency funds. Fortunately, instant payday loans bring a solution to the problem of short term cash crunch. However, given the high-interest rates and short tenure of these loans, one should consider their financial capabilities before availing them.
The repayment tenure of a payday loan usually ranges from 7 to 60 days. You can try to opt for a maximum repayment tenure of 3 months. However, you cannot extend or delay paying the borrowed amount and interest beyond your chosen tenure. If you do so, you will have to incur additional costs and might get penalised.
To be able to avail a payday loan, you have to be at least 18 years old and an Indian citizen. Furthermore, most financial institutions only offer this loan to full-time employees who have a regular source of income.
To allow for a hassle-free and simple process, these loans usually need only bare minimal documentation. Thus, borrowers need to furnish their proof of address and identity proof. Along with those, some lenders might ask for proof of income.
Usually, because of the high-risk involved in repaying this loan, lenders usually offer it to full-time employees only. However, if you show a regular source of income through your part-time employment, you might get a payday loan. This will come at a very high interest rate.
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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