Have you ever heard of salary loans? Salary loans are similar to payday loans except the fees are much lower and they are done at your local bank. A payday loan is a short term, unsecured loan that usually caps at $500 (though depending on your needs, there’s also usually some wiggle room allotted). With a payday loan, you’re expected to pay back the entire loan in full to the lender on your next payday following when you took out the loan.
You usually can only borrow up to $500, although there are some cases where you may be able to borrow more with a salary loan. It’s typically meant for business professionals who are trustworthy with their finances but have potentially hit a rough patch. These loans will help those professionals in this sticky place to get out of it and back in good financial graces. Here are some advantages to taking out these kinds of loans.
- Lower interest rates – The interest rates on these loans are much more manageable than pay day loans. That means that in addition to paying back the loan amount, you won’t have to back as much accrued interest as you would with a payday loan.
- Lending standards – Lending standards are making it easier to borrow money even if you have poor credit or no credit at all. Another major benefit for those who have been struggling to raise their credit score. And if you are able to take this loan out and pay it off in full and on time as promised, then this will show diversity in your credit history and will also go toward ultimately raising your score, anyway. It’s a win-win!
- Build credit – If done correctly, you may be able to build your credit score with these loans. Done correctly, as mentioned above, means that you pay back your loan in full and on the agreed upon date. If you need to start negotiating with your lender for leeway, that could end up hurting your credit score, unfortunately.
Word of caution, though, is that you should only take out these loans for emergencies. The payments are due right away meaning there is a possibility that you’ll run short on cash until your next paycheck. Make sure you properly assess your financial situation before taking one out so you can determine whether or not it will be feasible for you to pay it back as expected.
