The Truth About Payday Loans
There are times when you find yourself strapped for cash and need some quick finance options to tide over some emergency. Borrowing from financial institutions like banks could be a long drawn process involving many formalities and procedural issues. That is where Pikavippi come in. They are short term loans of usually of low value and it doesn’t take more than a few hours to receive the required funds. These days with the facility of online transactions, these loans could be obtained in a matter of minutes and the loan would be credited to the borrowers’ bank account. However, since they are given at a very short notice, these loans come at much higher rates of interest and should be taken only if there is no other option.
The Risks of Payday Loans
These loans usually are given without a credit check and most lenders might only take a post dated cheque that should be encashed at the time of repayment.In case the borrower is unable to repay the loan on time, the loan can be rolled over for a further period. However, there are many inherent risks involved and while the immediate cash flow problem may be resolved, in the long run, these loans can have a detrimental effect on your finances. Sometimes, the accumulated interest on these loans can work up to more than the loan amount itself. It is important to comprehend the risks and dangers and be aware of the lenders’ terms and conditions for payday loans.
Why opt for these?
Emergencies don’t announce themselves before knocking on your door. No matter how careful one might be in financial affairs, there are times when there is no other way out but borrowing and usually the money is required in a hurry. Payday loans offer the easy way out, which is what people are looking for during a crisis situation. The additional advantage of stretching the loan period makes people believe that they have the cushion to repay it as and when they are able to. But the truth is that payday loans if not repaid within the stipulated time frame can often turn into debt traps.
Who offers these loans?
There are many private financiers who offer payday loans. These loans can also be applied for and obtained online. The lenders usually don’t ask for any collateral security and release the funds to the borrower within a day. There are many other names for payday loans. Deferred advance loans, cash advance loans, soft loansand many more. But whatever the name, the underlying principles and pitfalls are the same. These days, some regularized banks also offer these kinds loans as they offer an additional source of income for them, however, borrowing short term unsecured loans from banks are also fraught with the same risks and should be avoided.
While it may not always be prepared for every kind of unforeseen circumstance, there are ways to minimise and mitigate the need for taking payday loans. Keeping a separate savings account for emergencies by depositing small amounts regularly is one way. Banks also offer overdraft facilities to their account holder and this option should also be explored. Better financial planning and management can also help in the long run.