Have you ever struggled through an emergency while dealing with a financial crunch or couldn’t clear utility bills or car repair costs? Wouldn’t it be relieving and less stressful to have a system that permits you to pay for car repairs in instalments?
Luckily, a payday loan could be one of your emergency cash source for such requirements!
Payday loans are short-tenure, unsecured, high-interest loans that are requested through lenders. One of the most amusing features of a payday loan is it can be utilised for something as unavoidable and necessary as repairing a damaged car.
But before we see the advantages and disadvantages that a payday loan has to offer, let us first talk about why the cost of fixing your car can dent your savings.
Why Car Repairs Are Expensive
Car repairs are expensive, especially in situations where the car has been involved in an accident. Car repairs have exorbitant rates because of the following factors:
- Replacement of spare parts
- Refurbishment of the car
- Labour charges
If you splurge cash on unnecessary expenses and have trouble managing your wealth, you would probably find it difficult to put out money from your pocket. In these situations, you can consider getting a payday loan.
Applying for a payday loan for repairing your car has its own advantages and consequences. Here are some benefits of getting a payday loan for a quick car fix.
Pros Of A Payday Loan
1. Easy Access
Payday loans can be easily procured when dealing with an emergency or unavoidable situation like a car breakdown. One feature that attracts consumers to such loans is their accessibility, such as getting a loan in 24 hours or a week.
You can apply for payday loans at any hour of the day, especially through the convenience of online technology. Hence, it is a popular mode of money lending in case of emergencies.
2. Quick Processing
A traditional loan process is time-consuming, has requirements, surrendering assets and requires a lot of paperwork.
In contrast, applying for a payday loan is effortless and easy. It eliminates the tedious and long application procedures that you generally go through when getting a loan. Thus, a payday loan acts as a boon in case of an accident or severe car damage repairs.
3. No Background Checks
Along with less paperwork and duration in receiving your loan, payday loans do not require background checks on your credit score or history. No inquiry on your credit report speeds up the process, enabling you to fix your car as fast as possible.
4. More Flexibility
The cost of vehicle repairs can make a hole in your pocket. But payday loans allow you to borrow money and choose your loan reimbursement repayment options. Usually, the loan repayment period varies from a week to months.
Although payday loans are fast, easy and handy, they have their own drawbacks. Some of the risk factors of applying for a payday loan are mentioned below.
Cons Of A Payday Loan
1. Can Be Expensive
Payday loans can be a quick fix when you are running low on funds to repair your car, but this easy-fix comes with a price of debts and interest. Payday loans will require you to pay double or trip attached to the cost of the car repair.
Not everyone shares the same access to wealth and finances that most of us do, especially during tough times. Unlicensed lenders are aware of this and add unnecessary fees or high interest rates, thus exploiting people during their hour of need.
2. Can Increase Your Debts
Time and tide wait for none – just like the increasing interest of payday loans. You should make the repayment of high-interest payday loans in a brief span of time.
Failure to pay off your payday loans will drown you in the pool of more debts and charges. It may lead to taking another loan to repay your previous car repair loans, thereby entangling you in a vicious circle of debt.
Although payday loans do not directly affect your credit score, accumulating debt over time may have an impact on your report and creditworthiness.
3. Can Make You Financially Irresponsible
Payday loans are not only used in distressful times but also for impulse buying like shopping or vacations. They can become a habit since they are so easily accessible, and you may find yourself taking out a loan for the smallest needs rather than saving up the cash.
Should You Apply For A Payday Loan To Fix Your Car?
Since payday loans have their own merits and setbacks, the handling and use of such loans decide whether it comes to your aid or drowns you in debt.
Payday loans do not discriminate on your need requirements, credits, collateral assets, etc. That said, payday loans also have other drawbacks like damaging credit, sucking you into the debt trap, and unauthorised lenders.
If you need immediate financial aid, payday loans are not the last resort. Other options that can lessen your burden include issuing low apr credit cards, availing the option of a vehicle-titled loan, borrowing from close friends and family, etc.
Taking aside some money from your salary as emergency savings and cutting down unnecessary purchases would also help you in such situations.
Plus, regular servicing and maintaining your car would prevent drastic and damaging events like accidents or breakdowns. This way, you can avoid bearing the consequences of a payday loan.
Payday loans are a debatable topic: they can either save you from a crisis or put you in one. Each year, millions of people avail the facility of a payday loan to handle any unavoidable emergencies like paying a due bill, mortgage, job loss, etc.
Payday loans are lauded for their convenience, easy accessibility, and merits favouring people with bad credit history. With an unfortunate occurrence or urgent need for money, these loans can be your quick and easy fix to your monetary problems.
However, before taking out a payday loan to fix your car, you should be aware of its cons as well to save yourself from potential financial problems concerning payday loans.