Instant cash loans or instant payday loans as a concept is facing constant scrutiny from various quarters. Critics rubbish it as a 'throwback to loan sharking' and 'extremely high interest loans targeted at the young and uninformed'. But is it that bad to avail of an instant loan? Are the companies providing these loans ripping off their customers? This despite the fact that these loans or advances are perfectly legal and are in fact provided by some of the big names in the financial sector. Therefore, the facts need to be examined closely before we reach upon any conclusion.

What exactly are instant pay day loans?

Instant payday loans are:

• Designed to tide over your short term monetary requirement (say between two pay days)

• Small loans with amounts ranging between $50 to $500 (or sometimes, may be more)

• Extended by agencies other than banks

• Unsecured

• Require no prior documentation

• Have employment certificate and proof of identification as the primary requirement

• Generally applied for online

• Typically processed and delivered within a very short time

• Expected to be repaid at the end of stipulated time frame, given the small amounts involved

For example: An individual borrowing $200 for two weeks can avail of a instant cash loan after furnishing a post-dated check for $260 encashable at the end of the two weeks period.

Do instant pay day loans help you take care of short term emergencies?

All said and done, this indeed, is the single most important utility of the instant cash loans. For example; the following day is your last and final call for paying the next installment of your house mortgage, and you are running short of a few hundred dollars. You have tapped your friends, your company, your parents, and every other conceivable source for securing a small sum to tide over the financial emergency, but to no avail. What do you do? Default over the payment and deal a blow to your credit standing, or procure finances from some other source and get going? The answer is obvious.

Do you end up paying through your nose?

Another serious reservation. After all, the $60 loan charge in the above example actually amounts to a very high rate if viewed as an annual percentage rate (APR). But is it right to compare instant cash loans with other types of loans in terms of APR? What is the cost of losing your individual credit rating? Can you attach a value to your peace of mind? Haven't you been spending $60 on something like a light lunch or even a pack of cigars? Companies extending these loans in fact, justify the high APR, in case one is solely interested in that, in terms of the high risks involved. The naysayer seem to forget the business fundamental: higher the risk, higher the rate of return.

Do instant pay day loans mislead?

Not exactly. These are just like any other loan when it comes to the terms and conditions. Yes, do make a habit to go through the fine print when it comes to accepting the terms and conditions of these loans. With the basic information and awareness in place, instant pay day loans are, quite indisputably, the best option to tide over a short-term, financial crisis.