Facing an emergency that needs fast cash can be a challenging situation. If you have no other means to resolve the issue, a payday loan can pull you out of the fire. In short, cash advances are some of the most convenient ways to access fast money without credit checks and collateral.
As for payday loans online, you only need to complete a quick request form. Each granted approval and subsequent deposit will allow you to withdraw the money and use it to your liking.
Before it comes to applying, though, ensure you grasp the pros and cons of payday loans. Below, we outline all aspects you need to know about this type of financial product.
What Are Payday Loans and How Do They Work?
A payday loan is a short-term cash advance intended to help you bridge the gap until payday. Applying for small loans is fast and convenient, with approvals following quickly after submitting the request. Once you and your lender find a middle ground, you will proceed to sign an e-agreement. In most cases, approved funds will land in your bank account within 24 hours.
The good side of payday loans is that you can use them for anything you deem necessary at that moment. However, the lender will expect you to repay the loan, along with fees and interest, with your next paycheck. Therefore, ensure you are able to service your debt within the set period to avoid extra charges and high interest.
If your financial circumstances change and you can’t make the repayments, inform your creditor right away. In specific cases, the payday lender may agree to extend your term or offer you a rollover.
How To Get a Payday Loan
DirectLoanTransfer prides itself on easy and transparent lending practices from scratch to hatch. Follow the steps outlined below and get funding at affordable rates.
- Complete the brief application. Go to our website and look for the Get Started button. Alternatively, you can pick your loan reason from the options displayed. Then, fill out the short application with the essential details, such as your name, ID, proof of income, and contact details.
- Select a well-termed payday loan. Your online loan request will reach our vast network of reputable lenders. Each of these partners will strive to tailor a personal loan that caters to your needs. You will receive a confirmation email that your application was successful. If this is the case, the link will redirect you to the direct lender’s website to complete the process. The decision to lend you money, along with the specific rates and terms, always depends on the individual lender.
- Sign the agreement. Once you get approved, proceed to sign the online loan agreement. It’s crucial to read the fine print of the contract and check the accuracy of your details. If you’re confident that the offer matches your intentions, sign the paperwork to complete the procedure.
- Get the money and repay with your next paycheck. Expect the deposit to reach your checking account by the next business day. In some cases, you won’t need to wait more than several hours. The transfer typically depends on the time you applied and the bank working hours.
The Benefits of Payday Loans
Taking out a payday loan when you really need the money has some upsides. Knowing these facts below can help you choose the best financial services for your circumstances. Check the plausible reasons why someone would opt for a small loan these days.
Likely To Be Approved
The probability of getting approval for easy payday loans is high since eligibility criteria are easy to meet. Unlike applying with traditional lenders, direct lenders only require you to provide minimal documentation. The criteria you must fulfill to get considered for a payday loan include proof of:
- Age (18 years or older)
- Citizenship (government-issued ID document)
- Recurring income source (at least $1,000 per month, in most cases)
- Active bank account
- Social Security Number
- Email address and phone number
Your payday lender needs this information to verify your ability to repay the loan and facilitate the process. Since most applicants succeed in meeting the essential requirements, cash injections are almost instant.
Quick Cash Advance for Emergencies
Are you concerned that getting approved for a personal loan will take days, if not weeks? Then, once you get approved, you’re afraid you have to wait even longer for the cash to deposit into your account. Well, there is no need to worry if you apply for a small loan online.
Small loans online are practical when you need money on a short note. You will get a nearly instant response from the direct lender with instructions for a fast cash transfer. Besides a few exceptions, payday loans usually reach applicants’ accounts within 24 hours after approval. The exception is if you apply in the evening or during national holidays and weekends because transfers could get delayed for a couple of days.
You Can Borrow Online
As with everything else, the world of personal loans has transferred online. Many lenders are following the trend and offering loans via digital means. As a result, online access to fast loans is super convenient for those who want to apply from the comfort of their home. Why go to a physical location when you can get things in order through your computer or cell phone?
Moreover, many borrowers prefer the private services offered by internet lenders. You answer a few questions, attach a few documents, and get the advance shortly after signing the e-agreement. An online payday loan is an attractive alternative in emergencies that cannot wait for regular business hours.
Easy To Apply
One of the most significant pros of payday loans is the fast and straightforward process. Instead of dragging tons of documents to a bank or credit union, you will only fill out a short online application. The request form requires only basic personal and financial information. Overall, you won’t need more than a few minutes to complete the application.
Ensure you have all the needed documents at hand to speed up the process. Any submitted data must be 100% accurate to avoid delays. Hence, always review the information you provide before sending your loan request in and selecting an offer.
Variable Loan Amount
Some people opt for a payday loan to settle unexpected costs, while others make a more significant purchase. Depending on your income, state of residence, and credit report details, the amount you get can vary.
If you meet all the criteria set by the direct lender, don’t hesitate to ask for the highest amount available. Though the average range is from $100 to $1,000, in some states, the upper limits exceed $20,000, like in Oregon. More so, there’s no upper limit imposed in states like Texas, Wyoming, and Utah.
Payday Loans Are Unsecured Loans
When you borrow money as a payday loan, there’s no need to put your home at risk, nor will you have to pledge your vehicle or valuables. Rather than endangering your assets, you take funds against your next paycheck.
However, the lender needs to know if your income is regular and recurring to ensure you’ll repay on time. Note that you won’t need to provide evidence of high revenue to back up your payday loan—most loan requests get approval provided you earn at least $1,000 per month after taxes.
Some lenders even approve loans to customers who receive benefits and similar revenue sources. Thus, with payday loans, you can forget about putting collateral to access fast money.
No Credit Check Required
Are you reluctant to apply for a loan due to your poor credit rating? Or maybe you fear getting rejected because you have no borrowing history at all. The good news is that payday loans are available to all consumers regardless of their credit scores.
Online lenders don’t run hard credit checks, so your rating won’t get impacted. The only thing your file will undergo is a soft credit check without any credit inquiries. Some products are even no credit check online loans. As a result, major credit bureaus have no way to learn about your actions, and you won’t have to depict your credit history.
Payday Loans With Bad Credit
If you suffer from a bad credit score, you have every right to fear that traditional lenders will turn your loan application down. This is because banks see you as a severe threat and believe you pose a high risk for their assets.
Luckily, payday lenders consider and approve payday loans even to clients with bad credit. They aren’t interested in your stained financial history and reckon that past missteps shouldn’t affect present opportunities. What direct lenders are concerned about is whether you can afford the payday loan here and now.
The Drawbacks of Payday Loans
Like any financing option, small loans have downsides that offset the favorable features. Despite being accessible and fast, a cash advance can have a detrimental impact on your finances. Here are several cons of payday loans that each borrower must be aware of before applying.
High interest and APRs linked with payday products can sometimes make them an unwise financial decision. The average rate of payday loans ranges from 6% to 36% and even above this threshold. The problem arises when people accept the rates without thinking at the time of signing the contract.
As for the annual percentage rate or APR, it can exceed 400% in some cases. Translated into money, payday lenders often charge from $15 to $20 per $100 borrowed. In states that don’t cap the maximum cost, short-term loans can come with even higher APRs.
Besides the high-interest rates, additional fees can also accumulate on top of the original loan amount. Here are the most common charges not to overlook.
- Early repayment. In some cases, this fee is flat, and in others, it represents a percentage of the payday loan amount.
- Origination fees. Also known as administrative, processing, or underwriting fees, you pay this cost when taking out the loan. In some cases, this fee is flat, and in others, it represents a percentage of the loan amount. Expect to pay between 1% and 6% of the face value of the approved check.
- Rollovers. If you can’t settle your debt when it’s due and rollovers are legal in your state, payday lenders may offer to extend your loan. Once you agree, you’ll have to pay another fee for the renewal while still owing the total original balance.
- Late fees. When you default on a payday loan, lenders can charge you a late or returned check fee. Your bank could also impose a non-sufficient funds or NSF charge if your check or electronic authorization bounces due to insufficient funds in your account.
Doesn’t Help in Building Your Credit
Contrary to common belief, payday loans can’t improve your credit score because direct lenders don’t report to the credit bureaus. However, in some states, you can boost your rating with installment loans paid over specific periods.
Still, even if credit bureaus keep track of your responsible behavior, you’ll pay a lot in interest rates. Sometimes, it could take several unreported loans to move up to better rates.
Most payday lenders inform credit reporting agencies once your debt ends up in collections. Hence, if you’re not cautious with taking small loans, any outstanding balance can harm your score. It’s best not to rely on short-term cash injections when it comes to improving your credit file.
Low Borrowing Amount
As stated, approved loan amounts depend on the state limit, the lender, and your financial situation. In states where payday lending is legal, consumers can borrow between $100 and $1,000. For example, the maximum allowed amount in Florida caps at $500. Often, payday funds may not provide enough money to meet your current needs.
More so, there’s no guarantee that the lender will approve the upper loan limit allowed by law. A reliable creditor will consider your repayment capacity and other obligations before sending you applicable offers. Steer away from loan companies that disregard low income and leave you at risk of burdening yourself financially.
Unfavorable Loan Terms
Payday loans are short-term solutions only and must get repaid between two to four weeks at the most. In other words, you must pay back with your next payday. The issue arises when the next paycheck is not enough to pay the loan off and survive the following two-week period.
Some customers will choose to take on another payday loan, and the process repeats. If you don’t have extra revenue for the month, it comes naturally to need another financial fix. It takes perseverance and strong will to repay any outstanding balance by the due date and refrain from indebting again.
Easy To Fall in the Payday Loan Trap
Not paying your payday loan on time and in full can land you in a debt cycle. In short, you might need to extend or roll your loan over to the next month, thus adding more fees to the outstanding balance.
The payday industry generates revenues from repeat borrowers who are unaware of their repayment ability. Hence, always estimate your financial situation before signing on the dotted line and getting yourself into a debt spiral.
Access To Your Bank Account
Payday lenders need your account and routing number for several reasons. First, they need your banking details to transfer the loan proceeds. Second, your bank account will get debited automatically when the payday loan is due.
Failing to pay back means lenders will attempt to realize the post-dated check unsuccessfully and incur extra NSF fees, or your bank will charge you overdraft fees. The safest method would be to use your savings account or request a prepaid debit card. Finally, under FDIC law, you have the right to stop automatic transfers even if you previously granted the lender this right.
Collection Agencies Can Go After You for Defaulting on a Payday Loan
In some cases, borrowers can’t manage their debt since they have other obligations to settle. They postpone payday loan repayment, hoping to pay the total back next month. If you don’t service your debt on time, it might get sold to a collection agency.
Next, you will have to deal with the collection agency, which can be ruthless at times. Many will contact you via phone and mail, seeking payment, and you can even get threats about going to jail. If this isn’t enough to get you to pay, debt collectors will proceed to garnish your wages until the accumulated amount gets settled.
Finally, you run the risk of ending up in a lawsuit when all collection attempts fail. The civil court will have the final word for the remaining balance and related fees. The worst-case scenario is a lien on your house or car or a levy on your bank account.
Is a Payday Loan Right for You?
When considering if a payday loan is the right path to take, you need to factor in your immediate circumstances. A justified reason to get a quick cash injection would be to cover an emergency expense such as unforeseen home or car repairs.
Additionally, you may often need the payday loan for instant funding within the same or next business day. Some surveys find that people use payday loans primarily to pay for recurring expenses such as utilities, rent, and other bills. Also, many Americans borrow money for medical, family, and children-related expenses.
Most importantly, avoid payday loans if you intend to splash out on non-necessities. Luxury travel, branded clothing, and jewelry are not the kind of emergency that calls for a quick loan. Finally, don’t attempt to resolve long-term financial problems by turning to payday companies.
DirectLoanTransfer is proud to offer its clients low-cost alternatives and legitimate payday loans with reasonable terms. We strive to help people overcome financial emergencies when they need money the most. We are always transparent about our rates and take an honest lending approach.
Payday loans can help you overcome a short-term financial crisis if you make the right moves. Applicants with a solid credit history who need a quick cash boost to settle a bill or sudden expense will find cash advances an ideal option.
Yet, small loans have inherent risks, too. If you doubt you can repay on time, think twice. You don’t want one uninformed decision to damage your credit history or land you in collections. Always weigh the pros and cons of payday loans before applying. Finally, stick to legit lending services like DirectLoanTransfer to avoid becoming a victim of scam lenders and get the best rates for your financial needs.