According to a study by the CFPB, the average payday loan has an APR of almost 400 percent. With the high interest rates, it makes you wonder why so many people are still utilizing payday loans every year. The question is, are they right for you?
In this article, we will review the benefits of payday loans are so you can make an educated decision. We will arm you with knowledge so you can live your best and happiest life.
What Are Payday Loans?
Payday loans are typically short-term and unsecured (don’t require collateral). These loans help you when you need quick financial aid. The amount you receive will be based on your credit score (if provided) and income.
When repaying your loan, you will typically pay the lender back once you get your paycheck. This generally means you will pay back the loan within one to two weeks of receiving it.
Payday Loan Benefits
Below we will review some of the best benefits payday loans have to offer.
It’s Fast AND Easy!
The application process is made simple and quick. It doesn’t take hours to fill out the application form. Once you have applied, your approval is almost instant (within an hour). You will generally get the funds either the same day or the next working day.
On top of that, you don’t even need to leave the house. You can complete the application right at home.
Unlike other loans, payday loans aren’t taken at a bank. You aren’t restricted by bank hours when applying for your loan in-person or online.
Qualifying Couldn’t Be Easier
Compared to other loans, payday loans no credit check have fewer requirements. In most cases, you don’t need to provide a credit score when applying for this loan. Generally, there are only four requirements you must meet to secure a payday loan. You must have an active checking account, proof of income, a valid ID, and be 18 years of age or older.
The Loan Is Income-Based
The amount you receive is based on your income. The lenders will review your salary to see how much you qualify for, for your first loan. This helps you as you won’t be able to borrow more than you can feasibly payback.
At the same time, you have the opportunity to get more money if you pay your bad credit loans on time. You’ll become someone the lender can trust. The lenders will be inclined to give you more money if you need it.
Other loans and credit cards tend to restrict you on what you can use them for. This is not the case with payday loans. You can use them to pay emergency bills, keep checks from bouncing, buy food, the list is endless!
Even so, it isn’t recommended to use them to buy things you want, but to only use it on what you need. Make sure you can pay back the loan before buying one. If you don’t, you will be paying back a lot more money.
Poor Credit? No Problem!
Whether you have poor credit or no credit, a payday loan can help you. While other loans may turn you away, you should be able to receive a payday loan when you have bad credit.
Yet, when lenders don’t check your credit you can expect to pay more, as they need to offset the risk you can pose to them. These types of loans are good if you only need a small sum of money. In most cases, if you opt not to show your credit score, you will get a sum of $500 or less.
Moreover, using payday loans can be a good platform to protect and build up your credit. If you pay your loans back on time, you won’t have points going against you. Instead, you’ll slowly build your credit back up.
Be aware that not all credit bureaus will look at your payday loan history. You’ll need to find a company that will look at your credit history. Only do this if you have a positive credit history with your payday loan(s).
Despite that, payday loans are short-term. If you aren’t consistently taking out loans you may not see much of an improvement on your credit score. It will take a while until you see a noticeable change.
What’s more, if you pay back the loan on time, you could receive a higher amount of money the next time you apply for a loan.
Regulated Interest Rates
Many states regulate how much interest can be taxed onto your payday loan. Check what your state regulations are before applying for a loan.
If you know you can’t pay back the loan on time, payday loans may not be right for you. Payday loans tend to be a one-time payment. If you don’t pay on time you will have ongoing interest payments.
Your Information Is in Safe Hands
You don’t have to worry about your information being shared with payday loans no credit check. The lenders can’t give out your personal and banking information to other companies.
On top of that, any sites that sell payday loans are encrypted to keep your information safe and secure. This makes it difficult for hackers to access your information.
Are Payday Loans Right for You?
If your credit is good, you may want to invest in other loans. Make sure to do your research on all loan types before you decide on which one to buy.
If you want to learn more about the different kind of loans out there and how they can help you, check out your options here. Here are some other articles you might find helpful: