Payday loans are specifically designed for people suffering from financial stress. These are short term unsecured loan which needs to be repaid on your next pay day. Sometimes, we run out of cash and blow all our last month’s income before the next pay day could arrive. Waiting for the payday to come, sometimes feel like an eternity.

One unique feature that separates payday loans from other traditional loan is that it can be easily accessed. You do not have to go through long, complicated process to get your payday loan approved. Payday loans can be used for almost everything that includes your medical bills, car repair fees or any urgent expense.

No matter what kind of loan you borrow, there are always some risks involved with it. Whether you are borrowing payday loan from an online company or local bank, the lender would not require a credit check. If a lender is not checking credit history of the consumer before approving and disbursing loan then there are obviously high risks of fraud involved. If you do not want to drag yourself in a high risk situation then you should better consider the following risks.

Payday loan can only benefit you if you receive it within a few hours of getting approved. However, there are some companies that promise to transfer money in a few hours to your bank account but fail to do so. Some companies may take as long as one week and your purpose of availing instant cash is not achieved. Therefore it is highly important that you choose a reputable company before applying for payday loan.

Before you apply for payday loan, you must ensure that the company you work in sends you paycheck up to 2 days early. This is because payday lenders demand repayment a day after the payday and if your pay check does not arrive in time, then you will have to bear high interest rate charges.

Another major risk involved is the accessibility of payment. You have to ensure the loan payment is accessible to you. The lender office should be a few steps away from your house or the company can choose to transfer the amount in your bank account. If the payment is not accessible then it’s better to look for other lenders.

Before you plunge into the decision of applying to a particular lending company, you should do comparison of interest rates and extra charges. Like any other loans, payday loans too, carry high interest rates. It would be a good idea if you do your homework and compare deals of different companies before reaching a conclusion. Moreover you should make sure you can pay back the borrowed amount of money on time as there are high risks of paying penalty fees on late or nonpayment. An individual only seeks payday loan deals when they are in dire need of money. The lender may take advantage of your condition and may not disclose all terms and conditions.

One of the major disadvantages of payday loans is that borrowers get addicted to this type of loan. These loans become a trap for most borrowers and whenever they fall short of cash, they borrow payday loans.