Desperate times call for desperate measures and it is these desperate times that enforce the individual into the debt trap. A Debt traps, whether short-term like cash loans or long-term such as the ones taken from banks, have their own pros and cons.
Cash loans like everything else have a good and a bad side. One of the most important of these loans is that they do not require any sort of background check. All sorts of people are allowed to borrow these loans. Furthermore, they also provide a lot of convenience to the borrowers. The applicants are able to get access to cash within 24 hours without going through any hassle. Furthermore, the borrowers are also given with a flexible repayment schedule.
One of the most common misconception associated with cash loans is that they are supposed of charging a higher rate of interest which in actual is not true. As these loans carry an annual rate known as the annual percentage figure people believe it to be higher. In reality, the amount is borrowed for a small period of time and therefore, people tend to repay a smaller amount as the interest amount is compounded for the period for which it has been borrowed.
However, one of the most important negative consequences of taking cash loans is the imposition of penalties and augmented fees on making late payment. In case of a failure to return the borrowed amount by the borrower, the lender imposes huge amounts of penalties upon the borrower. Furthermore, the borrower will also have to bear a higher amount of fees and interest payments. Apart from this, the inability to pay back the loan on time will lead to a decline in the credit score. If the credit score gets negative, it will make it difficult to get loans in the future.