Anyone can be in a position where they are strapped for cash.
If you’re facing a situation like this right now, you may be considering a payday loan. You aren’t alone. Twelve million people across the country get payday loans every year.
It’s easy to request a payday loan online. However, before you request one you should know that this type of loan comes with certain risks. There are lots of lenders out there, and if you don’t make the right decision, you could end up in an even worse financial situation.
If you’ve ever wondered about the pros and cons of payday loans online, here’s everything you need to know.
What Is a Payday Loan?
Payday loans are short-term loans for a relatively small amount of money. They are called payday loans because generally, they work to tide you over until your next paycheck.
The lender will secure the loan by getting either a check or authorization to debit your bank account. The term of the loan averages around two weeks. Amounts can be as small as $15 or as high as $1,000.
Due to the short space of time, fees for this type of loan are higher than traditional loans. However, some states cap the fees a lender can charge.
How and Where to Get a Payday Loan
You can get payday loans online or in person at a retail store. The process is pretty simple. All you need is a job and a bank account and to provide your physical address. Lenders analyze your information and could give you a response pretty quickly.
When the loan becomes due, the lender will cash the post-dated check you gave them. Sometimes, if you can’t pay right away, you’re allowed to roll over the payment. This will extend the term of the loan.
Payday Loans Online vs Retail
While you can get a payday loan in a retail store, online loans are much more convenient. It may also be the case that you don’t have a store nearby.
If so, you can fill out an instant payday loan request online easily and quickly. The whole process can be done from the comfort of your couch.
It’s understandable that you may want to speak to someone in person about borrowing money, but not to worry. Many online lenders have virtual assistance in case you have any questions. They may even have a phone number you can call.
The Costs of Payday Loans Online
You can expect to pay more for a payday loan than you would for a bank loan. As an example, a $100 loan may have a $15 fee. However, this should be weighed against the convenience of the alternatives.
The payday loan may be your best option in an emergency, so you should decide if the costs are worth it or not. Only borrow what you know your next paycheck can cover.
Things You Should Look out For
As with any form of lending, these loans come with risks attached. You won’t be in physical danger like you would be if you’ve used a loan shark. The worst case scenario is that you are charged an additional fee if you don’t have the funds to pay back the loan on time.
Much of the risks can be avoided by quickly repaying what you owe.
It’s advised that you do your homework and make sure the lender you deal with is reputable.
The Benefits of Payday Loans
There are plenty of benefits of payday loans for you as a consumer.
For example, you can get out of an unexpected financial obligation like a medical bill or car repair costs.
If you don’t have savings, you can still be eligible for the loan. It’s not tied to your assets, like a house. So you don’t have to worry about owning a car or home.
You also don’t need a credit card or a credit check.
Alternatives to Payday Loans Online
Depending on various factors, you might be eligible for an alternative to a payday loan.
A line of credit is one option. You will have a fixed credit limit if approved, and you will still have to pay interest and/or fees just like a payday loan.
Asking for a salary or cash advance from your boss is another alternative. Keep in mind though, your employer won’t be giving you free money. It will still come out of your paycheck, but you’ll get it a little earlier.
Alternatively, you could try to get some extra income from working a side job. Take care not to overextend yourself, especially if your main job is physically demanding.
Other Loan Options
Thinking about how other loans compare to payday loans online? Here’s what you need to know.
Installment loans are loans with a set number of scheduled payments. There is also a defined period of time you have to pay them back. This repayment schedule is the main difference between an installment loan and a payday loan.
Your choice will depend on if you want to be flexible on the amount of time you have to pay. Some lenders may charge you a penalty if you pay off earlier.
Bank payday loans
These go by a variety of names but are similar to regular payday loans. The thing is, the bank has access to your checking account. They could take back the money before you get a chance to spend it on other things.
If you still think your bank offers better terms, be sure to get the fine print explained to you.
Getting Payday Loans Online
Payday loans can be convenient and help you out of a situation where you’re strapped for cash. As long as you understand the risks, you can make the right decision for your financial circumstances.
If you think this type of loan is the right one for you, we may be able to help. Check out our payday loan options. If your request is approved, you could have the cash in hand soon.