Disadvantages of Payday Loans

Now a day Payday loan is a very common word in the financial market and very popular between the borrowers in all the present loans because of its benefits like fast processing, less requirement and fully online process etc. But payday loan also have some drawbacks and you can get the benefit by knowing these drawbacks before applying the payday loan. In this article we discuss all the drawbacks of payday loan.

One of the biggest drawbacks is the high interest rates on payday loan applied by the payday lenders. These lenders often make big profits by charging high interest rates on the borrower. Some times these interest rates go up to $40 per $100. If you are going to apply for the payday loan then must enquiry about the competitive lender before applying. You must negotiate with the lender on the interest rates of payday loan and also compare the interest rates with other lenders online.

Harassment of the borrower by the lender in case of non-payment is another drawback of payday loan. The amount that you take from the lenders must be paid back in time. Companies also provide the pay back plan on additional fees. If you are not able to pay the loan or your payback is returned due to insufficient cash then companies will call you at home and office regularly. Some companies also meet your family members and neighbors to harass you. Many companies make this legal under Fair Debt collection Act.

You can not borrow more than $1500 is another drawback of payday loan. Even to get the payday loan your salary must be $1000. If you take the payday loan first time then you can not borrow more than $300 to $600. If your salary is more than $1500 and you are stable with your job past 6 months and fulfill the basic requirements of loans then you get more than $600. These are some requirements of the lenders.

Finally we can say that Payday loans are not the permanent solution for the long term financial need or big instant cash need. If you are living on your monthly salary and have the need of instant cash then payday loan increase the burden on you instead of help you. It is important that you realize these drawbacks and look for other alternatives to fulfill your needs or avoid serious financial problems or bankruptcy.