How To Get Payday Loans Online
Posted on March 15, 2021 in Loans
When the time where you need money fast for an immediate expense, there are a few options available, but none are as fast as a payday loan. Although this particular loan may not be the best from a long-term financial standpoint, it’s hard to argue its effectiveness in the short term.
One of the most defining characteristics of payday loans is their convenience and speed. The internet has made it possible to make them even faster and more convenient, and there are many places online that will offer payday loans. These are a few things to keep in mind before signing on and accepting one, though.
What Is A Payday Loan?
Payday loans are short-term loans designed to help the borrower pay for an immediate expense. It’s considered short-term because the loan balance is typically due by the following payday or about two weeks from the initial loan date. Payday loans can be ideal for small amounts of money that are needed quickly but are not a good choice for larger amounts or longer repayment periods. Here are a few things to know about payday loans:
- If you need a large amount of money, then a long-term loan will be the better option. Long-term loans have a payback process that is much longer than a payday loan, and so the payments will be smaller over time. However, long-term loans will require a rigorous application process that can take days or even weeks before the money is exchanged.
Short-term payday loans are expected to be repaid by the time of the next pay period for the borrower, and if approved, the money is typically deposited overnight.
- Long-term loans often have a requirement to explain the purpose of the loan before the transaction is approved. There is no such requirement with payday loans, and the money can be spent however the borrower chooses. Additionally, long-term loans will rely heavily on the credit score and credit report of a borrower, whereas payday loans will rarely even check.
- Payday loans are not meant to be solutions to long-term financial problems. They should only be used as a type of advance on a paycheck. If you cannot afford to repay the loan by the time of your next check, it may be wise to seek an alternative option.
How To Get An Online Payday Loan
The process for getting an online payday loan is a fairly simple and quick one. The application process will most likely not require bank statements, tax forms, or other paperwork traditionally needed for long-term loans. A desktop computer, laptop, or smartphone are all options for applying for a loan, and the application shouldn’t take more than 15 minutes at most. Once you submit your information, then the process should only take a few minutes for options of loan amounts and payment terms to return. If you agree to the loan and it is approved then the cash should be deposited electronically into your bank account by the following business day. Payday loans are typically paid off in a single payment and rarely have prepay penalties, so as soon as you get the money and can afford to pay it back, you should immediately.
What Are The Qualifications For A Payday Loan?
With traditional long-term loans, there can be a lengthy process involved before any money exchanges hands. Information such as debt to income ratio, credit score, and payment history are all necessary information the lender will require before making a decision. Payday loans work much faster and with way less criteria required. There are only a few requirements needed to secure an online payday loan:
- Be at least 18 years old
- A valid social security number
- An active bank account
- Proof of steady recurring income
What Are Some Dangers Of Payday Loans?
While there are some benefits to a payday loan, mainly the speed and convenience of them, there are potentially a lot of dangers and risks that need to be addressed. Payday loans may help you to get out of a small financial jam but could end up putting you into a much more serious one in the future. Here are some of the downsides of payday loans:
- They can be extremely expensive. Payday loans are coupled with some of the highest interest rates of any loan available. For example, the interest rate on a standard home equity loan is usually around 5%; for a personal loan, it’s around 12%, and a credit card is usually around 16%. In the case of payday loans there are many states with specific laws dictating loan terms and legality, but it’s not uncommon for a payday loan to reach interest rates in the triple digits. Most payday loans fall in the range of 391% and 521% interest rate. If you are considering a payday loan, then expect to pay around $20 for every $100 that you borrow.
- Payday loans are considered predatory. A predatory loan is most easily defined as having unfair, misleading, or unaffordable terms to trap its users in a cycle of debt. Payday loans are considered predatory due to their high costs and fees that can escalate quickly. In fact, there are several states that have forbidden the practice of payday lending and several others that have restricted the process in varying ways.
A common warning sign of a predatory loan is if the lender doesn’t check whether or not the loan can be repaid. If a loan isn’t repaid then it can be forced to roll over into the next period which will accumulate extremely harsh fees and penalties alongside the already sky high interest rates.
- It’s easy to get trapped. When a payday loan is rolled over, then the fees and penalties can stack up extremely fast. Starting with a simple two-week loan term can quickly become months or even years to repay. In fact, nearly 25% of all payday loans are rolled over more than nine times. This cycle of debt can be devastating financially and very difficult to escape.
- The lender will have access to your bank account. One of the very few requirements to get a payday loan is to have an active bank account. There is a reason this is one of the few requirements, and it’s not just to have a place to deposit the money. Some payday lenders may attempt to recover the money that’s owed by taking it directly from the borrower’s checking account, which is generally granted by the borrower as a condition of the loan. These unexpected withdrawals can end up in high-priced overdraft fees and do a lot of damage to a credit score.
- Lenders can sue you for the money. If you fail to repay a payday loan, then legally, the lender will have the option to take you to court and try to get a judgment against you for failure to repay a debt. If the judgment is ordered, then you could face wage garnishment or even imprisonment. It’s important to note that legal battles are expensive, so for small-dollar loans, it may not be worth the money for the lender to sue. However, debt collectors may get involved, and the debt will certainly be reported to the credit bureaus.
- They don’t help you build credit. Payday loans do not help to build credit as they often do not report to the bureaus when a debt is repaid. Similar to how medical debt works, payday loans are usually only reported to the bureaus if a debt is sent to collections. So while a payday can hurt your credit, it will not help your credit.
Anyone in desperate need of money may turn to a payday loan for help, but this can be a very risky decision. It’s important to take time to weigh out your options before signing into something that could create more problems than it solves.
Payday loans have a few positive things going for them, such as their speed, convenience, and little qualifications required. However, the cons generally outweigh the pros pretty heavily. There are many options available to someone in need of money quickly, and while a payday loan is one of them, it should only be considered if all other options have failed.
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