Just like normal payday loans, weekend payday loans are products of financing which allow a borrower to access funds urgently with a requirement of paying back quickly. Payday loans are ideal for emergent situations. Since these emergencies are not limited to the normal working hours of working days, weekend payday loans are therefore designed to fill this gap left behind by contemporary lending procedures. Because of the urgent nature of the funds, weekend payday loan lenders usually strive to ensure that the money is deposited in the customer’s account without wasting time. It is thus recommended that before you make a decision to take out this kind of financing, you should carry out due diligence to ensure you land the best possible deal. Usually, payday loans are costly compared to other loans in the market. This is due to their nature of flexibility and high-risk target market.
How these loans work
Weekend payday loans are easy to obtain. In case you need instant cash during the weekend, you have several options because a money lender opens on Sunday, you can just visit their office or even apply online, that easy!
Usually, a borrower walks into the lender’s store with an identity card, a payslip, a social security card, or a driver’s license and a blank cheque slip. You will be offered a loan amount that would be approved by the lender. Then you will be required to write a post-dated cheque that will be covering the loan amount plus the interest and fees chargeable. The banker’s cheque would then be cashed at the end of the agreed loan term. In other instances, the lender will require you to grant the firm permission to electronically withdraw cash from your bank account once the loan period has elapsed.
However, since the borrowers need all the money on the payslip for domestic use, they are likely to pay the debt and take another loan or request for an extension on the initial loan term, which the lender may agree to or decline. If the request is approved, then the interest is re-computed, and a new amount is arrived at, which is generally higher than the initial amount. This is so because the annual percentage rates of payday loans are usually very high at about 300% compared to 25% on the usual loans. The APR causes the amount on the payday loans to multiply as the period goes up.
After multiple rollovers, you are likely to have a larger loan than you imagined pushing you to get another loan from another lender to repay the current rolled over credit. This leaves you in an unending debt cycle, which sinks you deeper and deeper into monetary woes.
Payday loans target market
Research has shown that payday loan lenders often target a population that does not have hefty payslips. Their ideal market is the lower-income earners who are strapped financially and would, therefore, need help to clear pay their bills and other expenses. Although this is where these firms thrive, they also advance funds to any person who gets stuck. For instance, if you want to purchase a commodity that cannot wait, emergency bills such as hospital bills, veterinary bills, etc. and many other unplanned urgent expenditures.
The notion by many people is that payday loans usually target people with challenges working through their payslips for the whole month. Hence, they make such people their frequent visitors since it typically grows into a cycle.
Other than extensive advertising in print and electronic, payday loans are common since they take advantage of peoples to love for simplicity and flexibility. With weekend payday loans, you are now able to apply for financing any day of a week. If applying online, then you can request for funds at any time.
Since their market involves the lower-income earners, payday lenders usually charge uncompetitive rates. The high loan rates are supposed to alleviate the risks that lenders take in the borrowers. Following that, the borrowers are not high earners. Statistics indicate that payday loans thrive mostly in countries and states that do not impose caps on the loan rates. Because of these soaring rates, borrowers usually take these funds in cycles ending up paying more in fees than the money they received.
Effects of payday loans
Ruins the borrower’s credit history – although payday loans do not require a good credit report to advance you with credit, defaulting in loan repayment means you are further damaging your credit score. Since these loans are short-term finances, they do not give you time to prepare for repayment, therefore if you are taking out weekend payday loans; ensure that you have sufficient income, which will shoulder the credit at the end of the loan period. However, if the lender tries to withdraw cash or the cheque bounces, then your credit history is pulled down with it. In some instances, the lender involves credit collectors and courts. If any of this happens to you, then the chances are that your credit scores are damaged beyond qualifying for future loans from other lenders.
You will be stuck in a debt cycle – most weekend payday borrowers get swallowed with debts that drag them for so long. And since most people are unaware or are ignorant about the rates of the loan, then they become apparent victims of these frivolous lenders. That is why choosing a good lender like Fortune credit makes a big difference.
Disadvantages of weekend payday loans
- They are very expensive to finance due to their exorbitant rates of interest.
- Several lenders demand permission to access your bank account.
- The debt collection process is not appealing
The only advantage is that the loans are flexible and easy to obtain. Other than convenience, there isn’t any positive about payday loans, implying the need to use alternative sources of financial credit products to finance the ever occurring emergencies.
The bottom line
As illustrated above, payday loans are very convenient. Indicating that you can take out these loan products at any time and anywhere, including online platforms. However, there are many ways to avoid these kinds of loans because of their reputation. You can have a budget with rainy-day savings, visit financial and credit councilors to improve your financial prudence, or get loans from traditional lenders and credit unions.