You should avoid payday loans at all costs. The average payday loan default rate is only 6%, but it’s still not worth the risk. One of the reasons why it’s a terrible idea is because there are a few great alternatives.
Start by applying for a credit card or overdraft, but look into short-term loans if rejected. You could receive the money within hours of being approved. Let’s discuss why short-term loans beat payday loans every day of the week.
1. Payday Loan Companies Are Untrustworthy
If you get instant cash loans from a respected lender, you’ll be able to find the interest rate straight away. Don’t try to find the information when you look at payday loan websites because you’ll waste an entire day.
Everyone is afraid to tell you the interest rate because it’s so high. You can’t trust companies that know their product is a complete scam. If you look for short-term loans, you’ll find the interest rates on their homepage.
2. Interest Rates Could Destroy Your Life
You could be charged around $20 for every $100 you borrow if you choose a payday loan company. That is how much you’ll pay if everything goes right. How much do you think it will cost if you run into trouble?
Around 1 in every 20 people default on payday loans. It could destroy your life if it happens to you. Some borrowers find themselves in so much debt it takes years to recover, but it’s easy to avoid if you choose the right lender.
3. You Can Settle Short-Term Loans Instantly
Borrowers like payday loans because they don’t like being in debt for too long. Luckily, it’s easy to settle short-term loans instantly if you have enough money available, so payday loans don’t have any unique positive benefits.
Do you know how to rebuild your credit score fast? Paying loans as soon as possible will help, so it’s always worth settling your debts ASAP. It’s easier to get loans in the future if lenders know you pay them back early.
4. It’s Easy To Qualify For Short Term Loans
You only need to provide payday lenders with proof of income before they’re allowed to give you cash, so the barrier to entry is low. Fortunately, it’s just as easy to qualify for short-term loans from trustworthy lenders.
You don’t need to be employed to get a traditional small loan. Just prove you’re getting child tax benefits or pension payments from the Canadian government, so lenders will know you earn enough to pay them back.
5. You Won’t Receive A Better Credit Score
Traditional loans are great because they improve your credit score, which is essential if you want even better loans in the future. Unfortunately, it doesn’t work with payday loans because they don’t report them to major credit bureaus.
Why do payday loan companies refuse to report your loans? Maybe it’s because you’ll need to go back to them if your credit score doesn’t improve. But companies like reporting you to courts when they’re trying to garnish your wages.
Avoid Risky Situations
It’s not worth putting yourself in a risky situation because you never know what will go wrong. There are better options available with trustworthy short-term loan lenders.
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