They are often referred to in not-so-endearing terms such as “legal loan sharks” and “predatory lenders”. But like them or not, they exist because there is a need for them. We are talking about payday loan lenders.

Payday loans, also known as payday advances are short term cash loans intended for emergent or unexpected situations. Whether it is to pay an unexpected bill, avoid a service shut-off, fix the car, or you simply need some extra cash till payday, they do come in handy.

However there are certain advantages and disadvantages that come with obtaining these types of loans.

Advantages of Online Payday Loans

1. No credit check. Banks will always check your credit history and score when you apply for a loan. And, they also have other requirements. This is why they will say “other conditions were considered” or similar words when they deny you a loan even though your credit may be good. Most payday loan lenders do not check your credit.

2. No collateral needed. With payday advance loans, your job is your security. All you need is proof of regular income.

3. No bugging friends and relatives. Whether it’s because you already owe them, you don’t want them to know your problems or any other reason, payday loans help you keep your problems under wraps. Of course, some companies do require references, but often they do not disclose the reason for calling.

4. Comparison shopping. With online payday loans, you can compare different lenders right from the comfort of your own home, office or anywhere else for that matter as this is the age of laptops, cell phones and handheld computers. All you need is access to the Internet.

5. Convenience: you fill out all your information right there on your computer and hit the submit button. If you do not feel comfortable going to a payday loan store, this is a big advantage. Also, payday loan stores are either not legal or not available in some states.

Disadvantages of Online Payday Loans

1. The biggest disadvantage of most if not all types payday loans whether online or at a store are high interest rates. The typical lender charges $25 for every $100 advanced to you. This is due to the fact that there is no credit check so you are presumed high-risk.

2. Most companies deposit the funds directly into your checking account. The funds become available the next day, which is not good enough is some situations such as electric or water disconnection. Also, an existing overdraft situation in your checking account could cause the funds to be “swallowed”.

3. Ideally, you should pay off the loan in full on the very next payday. But this is not always practical as some other needs may crop up. In that case you often have the option of just paying the interest and extend (rollover) the principle. You could find yourself in a vicious cycle after that.

4. You don’t have much say as to what you will get. The company decides what to advance you based on your income, checking account transactions and other variables. The amount you get may not be what you’re looking for.

5. There are many scam payday loan companies online with impressive-looking websites. Some of these scam companies will sneak obnoxious conditions in the agreement and you could find yourself owing several times what you borrowed.

Need a payday loan? Check out Direct Lender Payday Loans

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4. The Payday Advance Debt Problems Connection – Are Payday Advance Loans Friend or Foe?
5. A Loan Until Payday Can Be a Big Help in Times of Need