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5 Downsides of Fast Cash Loans
When you are looking for fast cash, you may think that payday loans are the way forward. The problem is that there are some downsides to taking these loans. You should consider all of the bad as well as looking into how the fast cash loans can help you; this will prevent you from making a mistake at some point.
Downside 1: Only a short term loan option
The problem with fast cash loans is that they are only for the short term. You will need to pay the money back at the end of the month. This can lead to budgeting problems if you constantly find that you are struggling to afford for things each month. It can be very easy to start taking a short term loan out to pay off another one.
Downside 2: Ruin your credit rating
If you use them as a way to budget each month, you will ruin your credit rating. The problem is that you will look like you are overstretching your budget to other lenders and they will be less likely to let you borrow long term loans. You can also do a lot of damage by not paying the money back; this will show that you are irresponsible because you cannot even afford to pay back a small loan within 31 days let alone installments over the period of three years.
Downside 3: High interest rates
This is a scary thought of fast cash loans. The interest rates are extremely high and you will find that you could end up paying hundreds for taking out a small amount in the first month. Of course, this all depends on how sensible you are with your borrowing. You can avoid these high interest rates by paying off the money by the end of the month and not letting it role over. However, you could find that you save a lot of money by organizing an overdraft on your bank or extending your credit card limit.
Downside 4: Not everyone can get the loan
Because there are no credit checks on these fast cash loans, the companies need to do checks to make sure that you are able to pay the money back. Lenders will usually have requirements and will want you to prove that you do meet those requirements. This cannot always be done only and there are times that the lenders will need you to fax the information; this can be difficult when not everybody has access to a fax machine anymore.
Downside 5: Low amounts of money
This can be seen as a downside because you may not be able to borrow just as much as you need. The problem with fast cash loans is that you need to prove that you are able to pay the money back and if you are on a low pay scale, you will not be able to borrow as much as you could need. The lenders are already putting themselves at risk so they cap the amount that you can borrow.