Payday loan advances are small amount of loans that can be borrowed by almost anyone who has a job and a bank account. These loans are issued for just a couple of weeks, as the due date for the repayment in most cases is the pay day when the borrowers receive their monthly salary.

You either give a postdated check to your lender or authorize them to withdraw money (principal amount plus interest and other charges) directly from your bank account on the scheduled due date. Though there are many attractive features of payday cash advances, there are some serious negatives aspects as well that you must keep in mind before you apply for these loans. Following is a brief rundown on some of its major pros and cons.

Pros: Almost Anyone Can Qualify

If you are above 18, a US citizen, have a decent regular monthly income with a bank account in your name, you can easily qualify for payday loan advances. Many lenders consider only salaried individuals as eligible applicants, especially the ones who have a checking bank account, where their salaries are deposited on a certain date every month.

But, even if you are a self-employed professional or just someone with a source of regular monthly income (such as alimony payments) and have just a saving bank account, you can still find many payday loan companies that will be more than willing to issue a payday loan to you. Your credit score is not checked to determine your eligibility, which means even people with poor or bad credit can also take advantage of these easy and quick cash advances.

Pros: The Application Process Does Not Take Longer Than Two Minutes

Unlike conventional loans, the application process for payday loan advances is very simple. It does not take longer than two minutes to fill out and submit your loan application, especially if you are applying online. Though some lenders may require you to attach some documents for verification, such as your bank statement and pay slips, a vast majority of payday loan companies do not require any faxing of documents. They claim to have an automated process for verification. Some even claim to offer ‘no verification payday loans’.

Pros: Loan Approval Comes Within 24 Hours

Probably, the most attractive thing about payday loan advances is that lenders approve your application very quickly. If you meet the basic eligibility requirements, you can expect to get your application approved within a matter of just a few hours. The money requested by you is usually transferred directly to your bank account. Now, it depends on your bank that how much time they take to process the fund transfer request. Normally, banks take one to two business days to process such transfers. This way, you can easily get the money needed within just a couple of days. If you are lucky enough, you can even get the money the same day.

Cons: Extremely High Cost Of Lending

Despite so many attractive features, you may still feel reluctant to borrow payday loan advances because of the extremely high interest rates and hefty additional charges associated with the same. In fact, financial experts claim that the terms of these short-term loans have been made so easy with an intention to trap consumers so that payday lenders can make more and more profit.

With so many lucrative features, as discussed above, majority of consumers often feel highly tempted to borrow these loans. Most of them even tend to overlook the fact that it is one of the most expensive options to borrow money. For every $100 of loan that you borrow for a small period of two weeks, you are likely to be required to pay back over $140. It means you should expect to pay somewhere around $700 if you borrow $500 for just fourteen days.

If you are borrowing for four weeks, you can simply double that amount. Lenders often claim to charge a very small amount of interest, such as $15 for every $100 of loan issued for two weeks, but they do not disclose the fact that there are hefty financial charges as well that are charged additionally.

Cons: Risky Provisions Like Automatic Rollovers

The horror of the predatory nature of payday loan advances does not end with just extremely high cost of lending; in fact, the real horror begins when you fail to repay the debt in time. Since the repayment period is so small and that most borrowers come from low-income group, due dates are often missed. When you miss the due date, lenders offer you an array of options that look convenient but are actually a debt trap.

For example, they usually offer you an extension of thirty days in the repayment period. But opting for such an extension means you will have to pay additional interest and other fees at the same high rate for thirty more days, which will eventually turn a $500 loan into a monster of debt. Lenders may also encourage you to borrow a new payday loan to pay off your existing debts, which has similar consequences. In short, missing the due date pushes the borrower into a nasty cycle of debt.

If you go through the reports and statistics, you will be shocked to see that there are people who have paid back over 6-8 times the actual money they originally borrowed and still owe several hundred dollars. Likewise, it is also very common to find people who have borrowed 5-10 payday loans and are unable to pay them back. Missing the due date thus starts a sort of chain reaction, where your debts keep on growing faster than you can afford to handle.

No wonder why the US consumers have been warned by the FTC (Federal Trade Commission) against payday loan advances. In fact, this is mainly because of this predatory nature of payday loans why sixteen states in the United States of America have declared these loans as illegal.

Other states are also coming up with strict laws to keep a check on the unfair practices that payday loan companies are usually involved in. Therefore, you are strongly recommended to look for better, safer alternatives to borrow money to meet your urgent financial requirements.