Payday loans are a type of short-term loan that can help you cover unexpected expenses or emergencies. They are unsecured personal loans that charge high interest rates and don't require any collateral. As a result, they can create a debt trap for consumers. Before you consider a payday loan, you may want to look at safer personal loan alternatives such as installment loans.
An installment loan is a longer loan that is paid in installments, while a payday loan is due the next payday. Generally, payday loans are returned around your next payday, which is usually 7-14 days away, depending on your repayment schedule. Payday lenders often base the principal of their loan on a percentage of the borrower's expected short-term income. To apply for a payday loan, you typically need to provide paystubs from your employer showing your current income level.
You can apply for a payday loan online or in-store and receive funds the next day. Unlike other loans, payday loans don't require any guarantee or bank account. Although the requirements for payday loans are more relaxed than with other loans, lenders may still deny your application if they consider the risk of default on the loan too high. Before you apply for a payday loan, you should use a personal loan calculator to determine what kind of interest rate you can afford.
This is because payday lenders earn significant sums from the interest they charge on these loans.Payday loans can be useful solutions for borrowers with less-than-perfect credit or those who don't want to go through the hoop of a traditional bank loan. However, you should weigh the pros and cons carefully before choosing this financing option. ACE is committed to helping you get the money you need as soon as possible.