Payday loans are very useful cash advance loans that are given to a borrower to be repaid at their next payday. This type of short term loans are getting more popular as more people now turn to this quick cash solution to get the cash they need before their next payday check. However, payday loans are not without a few limitations. Here are a few basic limitations of payday loans.
One of the main limitations of payday loans is the fact that they are very short term loans. This type of loans is usually taken just a couple of weeks before payday. The full loan amount and principal would have to be repaid by the next payday. Borrowers do not thus enjoy extension of the repayment period and spreading the repayment period over several months as with other regular loans. The borrower would have to make full repayment along with interest at the next payday. Some low income earners or people with debt issues are sometimes plunged into a vicious circle of recycling their income to pay payday loans on a regular basis, because they basically have little to live on after repaying the loan.
Payday loans do not also affect a person’s credit rating and so timely payments cannot count towards improving your credit score. Another limitation of payday loans is that the amount that can be loaned is dependent on the income expected. This is not thus a good avenue for raising large sums of money. The expected income must be able to repay the loan plus interest. If you are however seeking for easy and fast cash no matter your credit score standing, payday loans may just be what you need.