Five Advantages Payday Loans Have Over Other Types Of Loans

Posted on: 23 April 2015

Payday loans are a unique type of lending product, and because of that, they offer several advantages that aren't available with other types of loans. Below are five distinct advantages that make obtaining a payday loan worth considering when comparing them to other options:

Fast, convenient and easy

No other loan can be obtained as quickly as a payday loan. Many payday lenders are open seven days a week, often into the late evening hours. In addition, some payday loans can even be obtained online through a customer's bank; this makes loans available 365 days per year at any time of day or night.

In addition, payday loan applications are typically minimal and can be completed in a matter of a few minutes. Lenders have staff available on-site to help customers complete their applications if needed. Having this assistance from professionals helps make the process much less confusing than other types of loan applications.

No minimum level of credit required

One of the biggest positives associated with payday loans is that bad credit or a lack of credit doesn't usually come into play during the decision-making process. Instead, payday lenders are more concerned that customers are employed and receive a steady paycheck. The check provides the collateral necessary and assures the lender that the loan will be repaid.

Other types of loans require that borrowers meet minimal credit standards or provide collateral they don't have. This eliminates the possibility of borrowing needed funds for many everyday, hardworking people.

Cash in hand for any reason

A big advantage offered by payday loans is that funds are given directly to the customer for them to use as they see fit. Payday loans aren't tied to a specific purpose, and they allow a borrower to apply for a loan with complete confidentiality. If the money is being used for a sensitive or confidential reason, such as bail or a medical procedure, then no one but the customer needs to know the circumstances behind obtaining the loan. Most other loans require that borrowers disclose the purpose for borrowing, and this can be embarrassing for those who wish to maintain their privacy.

In addition, other types of loans don't always provide cash to borrowers; instead, borrowers may be forced to utilize special checkbooks or other restrictive means to access borrowed funds. With a payday loan, a customer can walk out of the door with their cash in hand, and this greatly streamlines the process of borrowing and helping the customer to meet their financial needs.

Cost of the loan is known up front

Another advantage offered by a payday loan is that customers know, upfront, the exact amount of money that will be due upon repayment. The interest is calculated, and any relevant fees are added to the loan agreement; customers can leave with an assurance of knowing what is owed and when it is due.

Other types of loans may involve less-definite calculations involving simple or compound interest, and the ambiguity associated with open-ended loans can cause anxiety. Payday loans help customers borrow money while still maintaining a sense of control over their finances.

Terms that protect borrowers from overextending themselves

Another huge benefit of obtaining a payday loan as opposed to other types of borrowing is the fact that repayment of the loan is built into the process. At the time of the loan, payday lenders usually require that borrowers provide them with a personal check for the amount owed plus interest; this check is held until the next day a borrower's paycheck is received. At that time, borrowers can be assured that they will either repay the loan in person or permit the check to be cashed, thus satisfying the loan terms.

Either way, there is a definite time when repayment must occur. In addition, since the loan is tied to the amount received in a paycheck, customers are assured that the amount borrowed will never exceed what can be repaid. This self-limiting factor helps keep payday loan amounts at a reasonable, manageable level for borrowers. Other types of loans may allow a borrower to exceed that which can be repaid; this can lead to serious financial trouble and even default or bankruptcy.

For more information about payday loans, visit