payday loans are short term debts and provide cash to tackle important expenses when you cannot pay for them yourself. Their repayment period is extremely short and they have to be repaid in two to three weeks. Usually, you repay the loan on the next payday. That is why they are called ‘payday’ loans.

To qualify for these loans, you have to be a legal adult, be employed and have a certain minimum amount of monthly salary and be the owner of an active bank account. You are not required to have a very good credit history to be eligible for these loans. That is why these loans are considered to be a really good option for people with adverse credit when they are in need of funds.

These loans are also popular for their quick accessibility. One can get loan approval and have the funds transferred to his or her bank account in a few hours after applying. This is a far cry from the traditional bank loans which require people to wait for several days in order to get the required funds.

On the flipside, payday loans are quite expensive as they carry a really high annual percentage rate. You can avoid having to pay a high amount in interest if you pay off the loan shortly. But if you do not, then you will find the total amount payable increasing rapidly.

Due to the high interest rate, these loans are often difficult to repay for many people. These loans can create a lot of financial problems if not handled correctly. Many people who have not paid off these loans on time, experience the amount payable shooting up. Thus, many experts advise people to be careful with these loans.

Besides this, when people do not pay off their payday loans on time, their credit score suffers. They will therefore find it difficult to get loans from banks in the future if they have a bad credit and are labeled as a loan defaulter.

These loans are very helpful in times of emergencies as they provide cash quickly. Thus, when people are in a crisis, they opt for payday loans without caring for these disadvantages. It makes sense because when people need cash quickly and cannot wait till their next payday, they are able to fulfill their needs through these loans.

However, there are some alternatives to these loans for financing emergency expenses. These include saving for emergencies, having a credit line for emergencies and opting for a peer lending service.
Thus, even though payday loans carry a lot of advantages and are really helpful in emergencies, you need to consider all the other options before opting for them. In addition, you must pay them back on time to prevent the accumulation of interest.