Payday loans are a means of quick, short-term cash advances that do not require a traditional credit check. Loans are usually due within a month or when the borrower gets his next paycheck, but it is possible to get online payday loans same day deposit of processing; thus, the term “payday loan.” The market for these loans grew swiftly in the late 1990s and 2000s. According to a recent survey by the Federal Reserve, each year, 12 million Americans take out payday loans hoping that they will be able to repay the loan by the time the next payday rolls around.
Minimum Eligibility Requirements Decoded
- The borrower must provide proof of employment or a permanent income source to guarantee that he can afford to repay the debt.
- The borrower must have legal residency in the US.
- The borrower must provide a Social Security Number or Government-Issued ID.
- To take a loan online, the borrower should provide an active bank account in good standing.
- Lenders usually require a valid phone number and email address to keep in touch with the borrowers if it’s necessary to verify any data provided in the credit request form.
Essential to Know
After taking out the loan, it’s highly advised to create a balance sheet with upcoming expenditures. Knowing how much you have coming and how much you are to spend is crucial to managing the process of repayment. If you feel you cannot make a payment on time, contact the lender, who might work with you offering a new repayment plan, which can prevent you from getting stuck in a cycle of debt.
The Best Online Loans For Poor or No Credit
When qualifying for cash advance loans, lenders do not heavily focus on the borrowers’ credit history. In plain language, a credit score is not what makes you eligible for most payday loan products. Because of desperation, many Americans with bad credit history try payday loans and find them an excellent solution to small unexpected expenses. Unlike other types of loans, payday advances don’t solve long-term financial issues and usually offer relatively short paycheck terms. If you are ready to repay it on time as agreed (between 2-4 weeks), a payday loan is a reasonable solution that won’t affect your financial health.
What if you Have Troubles Repaying a Payday Loan?
Failure to settle the payday loan should not be considered a kind of fraud. Generally, borrowers don’t realize how much the interest and fees add to the payday loan’s total cost. When the payment comes due, it’s more than they anticipated, rendering them unable to repay the loan. If this happens, the lender may turn to debt collection agencies to recoup losses and get back as much debt as possible. Remember, the collectors have no right to threaten you with jail. In this case, the Fair Debt Collection Practices Act is designed to protect consumers against abuse by debt collectors.
Falling behind on a payday loan repayment won’t hurt your credit since most cash lenders don’t report payment histories to credit bureaus. However, when your debt ends up in collections, the debt collection agency will likely report it to one of the major credit reporting agencies (Equifax, Experian, and TransUnion). As a result, you may expect a credit score drop, thus exhausted borrowing power.
Benefits of Opting for a Payday Loan
- 24/7 service: Fill out your credit request any time from any place in the comfort of your home.
- Simple credit request form: Submitting an online request for a cash loan takes less than a few minutes.
- Quick review: Online lenders usually review your claim within a couple of days.
- Fast money transfer: As soon as approved, money will be immediately deposited into your bank account.
- Online cash advances are classified as “unsecured” debt, meaning that you do not have to back up your loan with collateral.
- You don’t necessarily need to have a strong credit history to qualify for payday loans. Indeed, these loans are mainly designed for borrowers with bad or no credit.
The Bottom Line
The expanding availability of payday loans may be contributing to an increase in demand for small-dollar loans. However, it appears that a growing number of people are struggling to make ends meet. Since 1972, real incomes have fallen dramatically, and now more than a fifth of Americans have no emergency savings. Yet, the desire for payday loans persists because Americans’ incomes are insufficient to cover necessities, let alone save money.