Are you struggling to secure a loan for investment? You aren’t alone. There are so many Americans who still find it difficult to save enough to invest. Have you considered payday loans for investing?
A payday loan can be a source of ‘quick cash’ for employed individuals. If you’re considering payday loans as a source of capital, it’s important to learn about how this works before borrowing. You also need to weigh its pros and cons.
There are some people who think that payday loans are only restricted for emergency purposes. This couldn’t be farther from the truth. There are no restrictions in usage, meaning your options are endless including investing it.
Learn the pros and cons of using payday loans for investing here.
What Are Payday Loans?
Payday loans can be described as bad credit loans meant to give employees quick cash as they wait for their payday. It’s mostly used to address personal needs but its usage is not restricted. Its terms and conditions vary, but they are essentially just short term loans.
As a borrower, you may be expected to pay the borrowed money (plus interest) on your next payday. You’ll also have to pay the money in one payment, unlike installment loans where borrowers repay with multiple payments over time.
For some people, this may mean repaying the loan within two weeks. However, this doesn’t mean that there are no longer-term repayment options. Term length depends on the amount of loan you have borrowed, your income and the lender.
Most payday lenders are online lenders, meaning they don’t have traditional offices. There are so many payday lenders available to borrowers, and it’s advisable to research and compare rates.
Pros of Payday Loans for Investing
The benefits of using payday loans for investing include the following:
1. Source of Instant Cash
Does your business need urgent cash? One major benefit of payday loans is their immediacy. In some instances, it’s possible to obtain instant approval and have the money sent to your bank account within 24 hours.
Payday loans can be useful if you find yourself in a financial emergency or dilemma. Other installment loans may have long application procedures, leading to the delayed transfer of money.
For this reason, this loan is an asset for an investor needing a boost to their business before their next paycheck.
2. Easy Renewals
If you find out that you aren’t in a position to repay your loan on time, you can go to the lender before its due date and renew the loan. You will be required to pay a fee equal to interest owed and this will extend your due date- with an additional interest payment.
Or, in states where renewals aren’t allowed, you can take out another loan to cover the first loan you owed the lender.
3. Easy Approval Terms
In most cases, applicants who apply for this loan are likely to be approved. This is a great benefit, especially for investors with a significant need for cash but having a bad credit history.
In some cases, it’s possible to get approved for this loan without undergoing a credit check or review. In the event a payday loan lender reviews your credit, their reviews are usually ‘soft’ review. A soft review doesn’t affect your credit score.
Some lenders only ask for a pre-approved check to act as collateral. However, other lenders will request you to submit information about your employment, including income levels and future pay dates. Nonetheless, payday loan approval terms remain extremely liberal.
4. Flexible Borrowing
Some lenders set a minimum or cap on the amount you can borrow. Most, however, are flexible in the amount they’re willing to lend you.
Cons of Payday Loans for Investing
Discussed below are some of the drawbacks associated with using payday loans to invest:
1. Short Repayment Periods
Will the amount borrowed for investment purpose yield the expected return within 14 days period? This is because most lenders often need borrowers to repay the loan in full within a period as short as 14 days.
For many investors, this is practically impossible, considering the interest rates attached to the amount borrowed. You may end up paying more fees for failing to meet the repayment terms.
2. High Interest Rates
If you have a poor credit score, lenders consider you a high risk. Therefore, lenders will attach high-interest rates to the amount borrowed. Some of these rates are meant to act as prohibitive measures for people with a poor credit score.
You may be required to repay 30-100 % of the amount borrowed plus the principal. This can be a disadvantage for you especially if you lack financial resources to pay off the loan once your next paycheck arrived.
3. Automatic Repayment
When applying for a payday loan, you give the lender a signed check or another document that gives them permission to take funds out of your bank account. If you fail to show up on the repayment date as agreed, the lender is authorized to cash out the check or withdraw the amount from your account.
4. Payday Loans May Lure Borrowers into Debt Traps
Although payday loans offer fast cash, they may cause borrowers to remain in a repeated cycle of borrowing. If another tough financial situation arises, you may find yourself applying for another payday loan, and so forth.
This may result in a difficult situation where you’re constantly worried about a payday lender garnishing your wages or taking you to court. It’s necessary to plan carefully how to invest before applying for a payday loan.
Research Lenders Before Getting Payday Loans for Investing
Payday loans provide instant and secure cash in desperate financial times. However, they come with high interest rates and short repayment terms making them unfriendly for investment. Remember the above pros and cons as you research different lenders.
If your business hasn’t been borrowing loans for investing, payday loans are the best place to start discovering the lending world. You will learn how to handle lenders and discipline your business to make a short time repayment.
Do you need a payday loan? Contact us today to enjoy simple conditions for your payday loan.