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Being short on cash between paycheques can be difficult, so taking out a payday loan may be tempting just to get through the month.
A payday loan is a short-term loan of up to $1,500 that must be repaid within 62 days. Some lenders may ask you to fill out a form authorizing them to withdraw funds from your bank, or they may require a post-dated cheque to complete the transaction. Before they agree to lend you money, you will usually be required to show proof of employment in the form of a paystub and your permanent address.
The money is either given to you over the counter or deposited into your bank account. This may seem convenient, but becoming reliant on payday loans every month can lead to a spiral of expensive debt that is difficult to recover from. Below we will discuss the top things to consider before you take out a payday loan, along with the best platform such as Honest Loans to take out instant payday loans from.
What is Payday Loan?
A payday loan is a high-interest, short-term loan for a small sum — typically $500 or less — that is intended to be repaid with the borrower’s next paycheck. Payday loans are often made to people with bad or no credit and need only proof of identification, income, and a bank account. Payday loans have high-interest rates because they are used for short-term, immediate credit. They are also known as check advance loans or cash advance loans. Payday loans can be obtainable through storefront payday lenders or online, depending on your state’s laws.
Why Should You Apply for Payday Loans?
It’s Fast and Convenient
The most significant advantage of obtaining an online payday loan is its convenience. You can request a loan from anywhere with an internet connection, and the money is usually available within 24 hours. There is no paperwork or complication. Simply fill out a brief application, and you’re done.
There Are No Credit Checks
One of the best aspects of payday loans is that no credit checks are required. This is ideal for people with bad credit or no credit at all. You can get a payday loan regardless of your credit score as long as you meet the other requirements; visit this site of Honest Loans, you can learn more about no credit check payday loans.
You Can Get Money for Any Reason
These loans can help you whether you need funds to repair your car or just want to get some new clothes. You are not limited to using the funds only for emergencies. This is an excellent way to get some extra cash when you need it without having to explain why.
It’s a Safe and Secure Way to Borrow Money
Finally, one of the most significant advantages of obtaining an online payday loan is that it is a safe and secure method of borrowing money. The government regulates these loans, so you know you’re getting a good deal. You also don’t have to be concerned about giving out your personal information to companies because the entire process is done online. When you use an online payday loan lender, you can be sure that your data is secure.
Things to Consider Before Getting an Instant Payday Loan
Interest Rates of Payday Loans Are High
Payday lenders are required to publish an Annual Percentage Rate (APR). This is the interest you would be required to pay if you borrowed the money for a year. 5000% or higher is not unusual! Payday lenders say APR is not the best method for evaluating short-term loans and quote alternatives like “1% per day” instead. This is a good deal until you realize that you will owe double what you borrowed in less than three months, plus late payment penalties.
Beware of Online Unlicensed lenders
You should be aware of giving your information through a website, especially for payday lenders, as with any online transaction. Borrowing funds from an online payday lender can be unsafe because they may need to be licensed or regulated in your area, allowing them to set their terms and fees. Honest Loans always works with licensed lenders to avoid these risks and offer a good and safe money lending/borrowing experience.
Make Sure You Can Afford to Pay It Back.
Lenders should ensure you can afford their loan, but the Office of Fair Trading claims that many do not. You must ensure that you can pay it back when necessary. Make a budget by writing down how much money you have coming in and what you must pay for. If the budget shows you can’t pay back, think about how else to make ends meet.
If you cannot repay the loan in the given time period, you may be charged additional fees on top of the initial loan fee. If you roll the debt over or re-borrow, the fees start to add up. According to the CFPB, nearly a quarter of initial payday loans are repaid nine times or more. Additional charges may include:
- Need for more funds charge- If there is insufficient money in your bank account when lenders try to cash your check or electronically withdraw from your account.
- Late fees or return- The lender charges payment fees if you do not repay on time.
- Rollover fees- Charged on top of the original loan and initial fee to postpone the due date of your loan.
Conclusion
When you are in a critical financial situation, payday loans are a helpful alternative to get some quick funds in hand. However, because they are unsecured, lenders impose high-interest rates to cover their own risk. Nevertheless, these loans come with several advantages, such as convenience, speedy cash transfer, no credit checks, and more, along with disadvantages like higher interest, scammy lenders, and the need to ensure that you can pay back the entire amount on time. If you have no other options left, it’s always a good option to opt for payday loans.
Honest Loans is a good option to consider if you need a personal loan from a licensed lender but want to spend only a little bit of time on the application process. It is a great tool for your disposal as long as you read through your loan terms to ensure you understand what you’re getting into. Visit for more.