Are you in need of cash for some emergency expense that you didn’t see coming? Everyone gets that once in a while and it can really get you off track. Are you worried by the fact that you have bad credit? If you are and you just need a small amount then there is a solution for that. You can always turn to a payday lender. With online payday loans bad credit is no obstacle for you to get the money you need.
How Payday Loan Work
Payday loans are short term loans for small amounts when you run out of cash temporarily. The term for this type of loan usually lasts for two weeks. It is usually paid back when the borrower gets his/her next paycheck. The amount that can be borrowed for this type of loan is limited and is determined by the amount that the borrower gets during payday. Cash advance lenders mostly operate now through the internet. They operate websites where lenders can visit and file for loan applications.
Payday loans do not require any credit check. Even if you have bad credit that disqualifies you from using other financial products, you can still use payday loans. The main requirement for this financial product is that you should be working. You should also have your bank account.
Because of the simple requirements and the lack of credit check, the use of payday loans is quite popular these days. Millions of people are using payday loans yearly and according to experts, the numbers might rise in the years to come.
The Payday Loan Application
The application starts with going to a website of a payday lender. There are several ways that you might have become aware of the site. Someone you know might have recommended it to you. You might have received an email or text message from the payday company or you could have done a search on Google for “payday lenders.” The websites would application forms and all you have to is to provide the needed information submit it and then wait for the result. It’s as easy as that.
You do not have to wait long when you are getting a payday loan. Lenders usually process the application within a day so you would know the results quickly enough. Besides, payday loan applications have very high approval rates. More than 80% of all applications get a green light from the lenders.
Qualities of Payday Loans
There are many qualities that make payday loans very attractive to most borrowers. We have mentioned that the whole application process is purely online. That makes it very convenient for the borrower because there is no need for the borrower to go to the office of the lender personally. One can file it while staying at home or while even at work. It can also be done at any hour so there is no need to wait for the proper operating hours. You can get the process started immediately.
The lack of requirements and credit check is another major draw for a lot of people. Paperwork can be a lot of trouble for some and if they can stay away from it they would. One other quality of cash advance loans that is worth mentioning is the lack of any restrictions on how he amount that you borrow can be used. How you spend the money that you are going to get is totally up to you.
What You Need to Know about Payday Loans
But you have to be careful because payday loans can also be troublesome. In fact, a lot of people have fallen into financial trouble because of this type of lending which has caused the government to issue some warnings against the use of payday loans.
The biggest trouble with payday loans is the cost. Remember the fact that cash advance lenders do not require credit checks? That comes at a price and the price is that you would have to pay for extremely high annual percentage rates. You might not see it initially since they just charge a flat fee for the amount that you borrow. When you borrow $100 you might be charged with a fee of $20 and the term of the loan would last for two weeks. When you compute that as an APR of the loan, you would see that you are being charged 426% per annum.
Not Solving the Problem
Using a payday loan cannot resolve the financial problem that you are having at the moment. If you are short of cash for example, borrowing a loan with a high interest will only resolve the immediate problem but will not work on its roots. The main problem that you have is that your earning is not enough or your expenses are way beyond your means.
Turning to payday loan whenever you run short of cash can be a risky practice. It can expose you to even more financial problems. You might be forced to keep on borrowing just to keep up with your expenses. Because there are no restrictions as to the number of times that you can use payday loans, you might end up being in a great deal of debt eventually.
Payday Loan Scams
As if the risks that are inherent with payday loans are not enough, there are some scammers out there who are taking advantage of those who are in need of cash. Here are some of the things that you can do in order to stay clear of these scammers:
Paying Money to Get Money
We mentioned that payday lenders charged steep interests and that is perfectly legal. You have to pay everything back once you have used the money that you borrowed. When a lender asks you to pay money up front before they would lend you anything then that is a sure sign that something is wrong. You don’t have to pay in order to be able to borrow money.
Wiring Money or Putting Money on Prepaid Cards
Another common practice of payday scammers today is to ask borrowers to wire in money through Western Union or MoneyGram. The scammers would try to justify that by saying the money to be sent is some sort of fee that would be needed in order to continue the processing. There have also been some cases when the scammers asked the borrowers to load money on prepaid debit cards and then to send the actual cards or just the numbers on the cards. Either way the users can use the information.
Asking for Sensitive Information
When a lender asks for sensitive information such as your social, you should know that it is probably a scam. Real payday lenders would not need information like that. They are probably targeting you for some scam or to flood with other scams.
Don’t Be Fooled By the Website
Don’t suppose that because a lender has a legitimate looking website that it really is okay. Remember that scammers know what it takes to fool you. They know how to make their website look legitimate in your eyes and they can really have a nice and professional looking website. Sometimes there is no way for you to know that you are looking at a website of a scammer. The best thing that you can do is to conduct some research and find out if a lender that you are interested in is legit or not. You can check that with the government agencies concerned.
Report Right Away
If you have been victimized by a payday lender you should report it right away. That is one way that you can make sure that they can be stopped in their scamming. You don’t have to wait until you become a victim. Even if you are just approached by what you think are payday scammers, you should report it to the proper government agency right away.
Alternatives to Payday Loans
There are several alternatives to payday loans that you ought to consider. You can try borrowing personally from the people that you know for example. It might be a bit embarrassing to do so, but your friends and family should understand your situation. You can also try borrowing from a credit union or you can try a peer to peer lending service. The terms that you can get from those lenders would be a great deal better than what you can get from payday loans. You should also try talking to your creditors and maybe get an extension on the due date of your bills. How about getting a cash advance from your work? All those options would be better than getting a payday loan.
The fact is that payday loans are expensive. You might end up in a great deal of trouble if you keep on using payday loans to pay for the regular expenses that you have. That’s not meant to be used that way.