Ever tried getting a loan? It can seem impossible if you have a bad credit score. In fact, over 34.2% of people have subprime credit scores. This means they have a very low chance of getting their loans approved by banks and other lending companies.
Even when you do qualify, it can take a bank weeks before they approve your application.
If you are one of those people with subprime credit scores, there is no need to worry. You can still get yourself a loan through same day payday loans.
How do payday loans work, you ask? We’ll tell you about that along with other things like payday loan interest rates, and what requirements you need in our guide below.
The Problem with Personal Loans
There is a reason why personal loans are responsible for causing 67.4% of the total debt most families are in.
Personal loans pose a problem to a borrower on very rare occasions. However, if you’re someone with a bad credit score, you may find that you will have your requests rejected more often than not.
Banks and other lending companies take into account your credit score as well as your credit history. How good your credit history is will depend on how responsible you were at paying past bills. They show them if you pay your bills and loans on time, if you have any outstanding debt, and if you’re about to reach the limit of your credit cards.
Having a bad credit history will make your credit score look bad, and it will be even harder to maintain a good credit score if your credit history prevents you from gaining credit. This is the main problem of personal loans.
Even if you do manage to make a good show of your credit history and scores, it may take at least 7 days or even up to a month to get your loan approved.
While there are ways for you to take a personal loan while having bad credit, they often come at a steep price and will require you to present a big collateral.
Meanwhile, same day payday loans differ from personal loans in many ways.
Do You Need a Good Credit Score?
When you apply for a same day payday loan, you don’t need to have a good credit score or a good credit history. In fact, some payday lenders don’t ask you to present either of those. Though it is still good practice to bring them in case they do ask for it.
When applying for a payday loan, you’re only required to present an ID and proof of employment. This tends to be the norm for when you’re applying for an unsecured loan. When you’re applying for a secured loan, however, they may ask you for collateral to bring along.
How Long Does a Same Day Payday Loan Take to Approve?
Same day payday loans often only take a day to approve, which is why they get the “same day” part of their name.
Lenders tend to speed things up for the convenience of the borrower. They don’t lay out any longer papers or forms for you to read through and sign. Even in the very rare case that you don’t get your loan approved, the payday lenders will let you know within the day. Preventing you from wasting time wondering and waiting.
Often times, you will also get your money on the same day as you apply for a loan.
How Long Do I Have to Pay My Loans Back?
If you don’t want your account to get defaulted and have your loan be part of the 1.22% of nonperforming loans, you will need to repay what you’ve borrowed within the agreed upon time period.
Lenders will differ in terms of how long you will have to pay back your loans, but you can negotiate the terms to select a duration that suits you and your financial situation.
Long Term Payday Loans
There are some lenders who are willing to wait for a period of 3 months for you to pay back your loans. These loans often become payments that require you to only pay the interest. These types of payday loans are rare and hard to come across as payday lenders are looking for a quick return on their investment.
30-Day Payday Loans
There are also some who will wait for a period of at least 30 days for you to repay them. 30-day loans often require a collateral for you to present in order to get your loan approved. Most of the time, if you are unable to pay for your loan within the 30-day period, lenders will give you an extension of another 30 days.
However, doing this means that the lender will take temporary ownership of your collateral until you are able to pay them back.
2-week Payday Loans
The most common duration lenders agree upon is within a pay period. A pay period is the number of days one has before their next paycheck comes in, which is why they’re called “payday loans”. This is most preferred because it is the easiest one to work around with. It doesn’t put much strain on the borrower and doesn’t put that high of an interest rate.
Is There a Catch with Payday Loans?
There is no catch that comes along when you’re applying for payday loans. You only need to pay it back the next time you get your paycheck, and there will be no problems.
For credit card users, the interest rate can go from 9% up to 30% for late payments.
However, if you do miss a payment and don’t borrow with a credit card, the usual interest rate increases to over 400%. There are other lenders whose interest rates go as far as a 5,000% increase when a borrower doesn’t pay on time.
While the increases may seem high, they are only annual percent rate of the current fee you owe. Given that the minimum amount of time lenders is 2 weeks, this should also not pose a problem as long as you pay your dues on time.
Lenders enact this to make sure that their borrowers not only pay on time but also to let them know the consequences of being behind many payments.
Are There Different Options I Can Choose From for Payday Lending?
Yes, there are different options available for you to choose from if you decide to apply for same day payday loans.
Brick and Mortar Payday Lenders
These are the lenders who have a physical outlet that you can enter. These are the more traditional lenders that people go to because they can acquire the loan on the spot and not have many issues.
These outlets are also often chosen for security reasons. Meeting with a lender or a lending company in person will give the borrower a chance to see where the money they’re borrowing is coming from.
A borrower can also issue post-dated checks in these kinds of outlets.
Direct Online Payday Lenders
Somewhat new to the lending scene, online payday lenders offer the borrower the convenience of staying at home to make a loan.
These lenders issue their loans through digital means, making it a simpler task to perform. They also often display the details of their loans online, allowing borrowers to know where they get their loans from.
There are some challenges that come along with online lenders. For example, some lenders are not stationed within your country, often somewhere else. This may present some complications when it comes to claiming your loan.
Also, being digital and all, there may be other unseen complications happening within when transactions get processed, which may lead to you getting your loan later by 1 or 2 days.
Should I Apply for a Same Day Payday Loan?
That depends on certain factors.
First, you need to know how much you need to borrow and what you’re borrowing it for. Only borrow money for your essentials or for emergencies, and if you can cover for the expenses with your own paycheck, then you don’t need to worry about applying for a loan.
Then, take into account your usual salary. Is income enough to cover the interest rate when it’s time to repay the loan? If it is, then go for it, but if it’s not, and you need the funds, then you may want to consider bringing collateral with you when you apply.
Also, it’s good to keep in mind that when you apply for a payday loan, paying late will cost you more money than you borrowed. So, you should always make it your top priority to pay back your loans, even more so when you apply for back to back payday loans.
Know About Same Day Borrowing and Payday Loan Interest Rates with This Quick Guide
You should now know more about same day payday loans and other stuff like the different options you have and payday loan interest rates with the help of this guide.
If you found this guide helpful, come over and visit our website for other helpful guides. Try out this one that discusses some interesting fact you may not have known about the best credit card offers.