About 80% of Americans say that they live paycheck-to-paycheck.
If you’re among them, you know that it can sometimes feel impossible to save for larger purchases like a car or even pay down a large chunk of your debt. You feel like you’re barely keeping your head above water every month.
Payday loans may be the solution you need to get your finances back on track — and help you to be able to afford the things you need but can’t afford without a little help.
In this post, we’ll tell you everything you need to understand how payday loans work.
These loans can give you a break from the stress of worrying about breaking even every month.
The Basics of Payday Loans
First, let’s discuss the basics of how payday loans online work.
It helps to think of them as a kind of advance on your future paycheck. If you need to make a bigger purchase or cover an unexpected expense, you know that you have cash coming in from your next paycheck to help you be able to afford it.
But you still have to wait to get paid.
Payday loans give you the money you need before your next pay cycle. They’re in an amount at least somewhat comparable to your paycheck — anywhere from $500 to $1,000.
These are short-term bad credit loans that you should aim to pay back in full once your next paycheck actually arrives. These are different from installment loans, where you pay back the loan over the course of multiple monthly payments.
This is because payday loan interest is unusually high, in some cases with an APR rate of over 100%. However, if you’re able to pay back the loan on time, this may not be as much of a pitfall as many people make it out to be.
You should also take a look at any fees associated with the loan.
In the end, you’ll need to seriously evaluate your current level of debt and income — as well as what you need the money for — to make the best choice about whether or not a payday loan is right for you.
Currently, about 12 million Americans apply for a payday loan every year.
Now, let’s take a look at some of the reasons why you might need to apply for a payday loan.
Common Uses for Payday Loans
Now that you have a basic grasp of how payday loans work, let’s talk about what most people use them for.
Many people use online loans to help them cover unexpected expenses that impact their everyday life.
For example, you might need to use the funds from a payday loan to help you cover the cost of a car repair because, without a car, you can’t get into work.
You may need the money to pay for a dental emergency or a sudden medical expense. Perhaps you have a small home emergency, like a leak, a problem with your home’s HVAC unit, or cracks in your windows after a storm.
In some cases, you may use loans to help you make your rent payments on time — especially if you’re just a few hundred dollars short of where you need to be. The same goes for basic cost of living expenses like your groceries and utility bills.
Guidelines for Payday Loans
There are a few essential things to keep in mind when you’re considering applying for payday loans no credit check.
First of all, never borrow more than you know you’ll be able to pay back.
Yes, it can be tempting to take a higher amount of money than you originally intended. However, because of the high interest rates attached to payday loans, doing so can get you into serious financial trouble.
You don’t want to get trapped in an endless cycle of debt.
Also, make sure that you’re using your payday loans for smaller purchases or payments.
They are not suitable for things like making a down payment on a house, funding a vacation or wedding, or any kind of purchase that isn’t truly necessary.
Remember that there are tons of different lending options out there for larger expenses. If you have larger loans, try to renegotiate with your lenders. Don’t use a payday loan to help you make loan payments.
The Application Process
Another reason why payday loans are so popular?
Because the application process, especially when compared to other types of loans, is incredibly easy.
In the majority of cases, you’ll be able to get approved for a payday loan same day cash in as little as 24 hours. The funds are likely to be deposited directly into your bank account once you’re approved for your payday loan.
Especially if you’re facing a major emergency, this expediency is a huge help.
Additionally, payday loans are a great lending option for those whose credit scores aren’t exactly where they need to be. Most of the time, payday lenders will not even perform a credit check.
This is a huge help to those who need to borrow and are already in financial trouble. Plus, paying back your payday loan on time can actually help you to repair your credit score.
There are a few things you’ll need to show when applying for a payday loan, however.
Usually, you’ll need to give lenders a proof of income. This can be something like a pay stub or a letter of employment. This lets lenders know that you have the means to pay back the loan.
You’ll also need to be at least 18 years old, and have an active checking account.
You should check with the individual application requirements of a lender before you take out your loan.
How Does the Repayment Process Work?
So, you’ve decided that a payday loan is the right financial move for you.
Now, you want to make sure you’re clear on how the repayment process works.
In general, when the bad credit loan guaranteed approval comes due, you’ll need to pay the amount of the loan off in a lump sum, plus any fees associated with the loan.
Some lenders may automatically deduct the loan payment from your checking account. Others may ask that you make a cash payment in-person. Still others may accept a post-dated check as payment.
You need to make sure you’re clear on exactly when your payment is due. Generally, when you apply for the loan, the lender will ask about your pay cycle. You’ll usually need to pay the loan back once your employer has given you your next paycheck.
This means the loan could be due in a week, in two weeks, or in a month.
What Happens If Payments Aren’t Made?
We know you’re also curious about what could happen if you’re unable to pay back your loan on time.
In general, most personal loan no credit check lenders are willing to work with you — to a certain extent — if you can’t make your payments on time.
They will likely grant you an extension, though the fees charged on the loan will need to be paid on the original due date. Because you’ve rolled over your payment into a new term, you’ll need to pay those fees again on the next due date.
This is why it’s so important to try to avoid borrowing more than you know you’ll be able to pay off on your next payment cycle.
Remember to take the time to evaluate your current spending habits. Any of these budgeting apps will help you to understand where your money is going every month.
Things like subscription services you never use, or non-essential spending on things like clothing and entertainment, may need to go for the time being. The same goes for eating out, non-essential transportation expenses, and much more.
Look for what you can stop spending on for a few months, and you may find that you don’t need to apply for a payday loan at all.
How Payday Loans Work: Wrapping Things Up
Now that you know how payday loans work, and what they should and shouldn’t be used for, you’re likely ready to begin the application process.
Submit your request with us, and find the payday loan that works for you.
Looking for more information about other types of personal loans — especially ones that could help you to finance a larger purchase? Interested in understanding more about which credit cards are the right fit for you?
We’ve got you covered.
In addition to helping you to apply for the loan of your choice, keep checking back in with us to get more lending advice.
Avoid entering into a cycle of debt, boost your credit score, and finally gain financial freedom with our help. Here are some other articles you might find helpful:
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