How Do Payday Loans Work?

Apr 20, 2021 11:13:06 AM Budget, emergency loan, payday loans




Written by Spotloan

Payday loans are a popular choice among customers needing fast funds. Though they can look appealing at first glance, there are a few things you should know before locking yourself into a payday loan. After all, the most well-informed choice is often the best choice, and it can be hard to find the information you need when you’re distracted by a financial emergency. 

The Ins and Outs of Payday Loans 

A payday loan can often feel like the only option when you are experiencing a financial emergency. But, just because you have poor credit and limited savings, it doesn’t mean that a payday loan is your only option. We’ve tried to make it a bit easier for you to understand your options by providing you with helpful financial education insights about payday loans and other emergency loan options.

What are Payday Loans? 

Payday loans, as the name suggests, are loans that are due to be repaid when you receive your next paycheck. This is typically within two weeks but can even be just one week, depending on how often you get paid and what you agree to with your lender.

Why Should You be Cautious of Payday Loans?

Payday loans have long been considered easy to acquire and accessible. These loans are essentially an advance against your next paycheck. Unfortunately, this doesn’t give you much time to catch up before repayment and the payday lender’s fees come due. 

Choosing a loan with a longer repayment period, like a Spotloan, can provide you with some advantages. Your payback period can range from a few weeks to ten months, depending on your preference and needs. If you are taking out an emergency loan, you likely have a lot on your plate to manage. The last thing you want to worry about is how you are going to pay off the loan by your next pay period. Personal loans are often used in emergencies, but it is important to remember that they are not your only option.

What Happens If You Can’t Repay a Payday Loan On Time?

If you find that you can’t repay your loan by your next paycheck, you may be able to extend it or roll it into another loan. Be warned, however, that this can come with additional fees that can add up quickly and make it harder to catch up. 

If you default on a payday loan, which isn’t entirely unlikely with a repayment period of just two short weeks, in the worst of situations, the lender may choose to send the debt to a collections agency, which can damage your credit score. Even if you are prepared to pay your payday loan back in two weeks, however, you’re likely to pay much more in interest than you would for a personal loan like what Spotloan has to offer.

What Makes Spotloan Different From Payday Loans?

While they may be used for similar purposes, Spotloans are much more flexible and convenient than payday loans. Rather than a two-week repayment limit, you can give yourself up to ten full months to repay your Spotloan. This makes it easier to break out the repayment over several weeks or months, simplifying the process and ensuring that you have enough time to repay your loan.

Another reason that our customers prefer us over payday and other lenders is that our fees are always straightforward and revealed upfront. No hidden fees or surprises down the line, just an honest, easy, and flexible loan to help you get where you need to be financially.

Getting Started with Spotloan

At Spotloan, we offer easy payment options, clear qualification criteria, a quick and easy online loan application, same-day funding in some cases, and superior customer service. But we also know that our emergency loans are not for everyone. Spotloans should not be taken lightly. We encourage you to do your research and make a well-informed decision that best fits your financial situation. 

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