The options available for borrowing money when you have low to no credit are extremely limited. It is very challenging to get a bank loan, while some people may also find it difficult to obtain a credit card without a respectable credit score. Such individuals are eligible to apply for and receive payday loans. These short term installment loans can provide the financial relief individuals and families need. Below is a short guide on these installment loans.
Understanding Payday Loans – The Basics
A payday loan is a very short term loan that is geared towards assisting individuals who need a quick injection of cash as soon as possible. While most bank loans require a lengthy approval process, payday loans are approved within hours. With the help of online installment loans instant approval, individuals get an online installment loan with instant approval that puts cash in their bank account within three or four hours.
Unlike credit cards and personal loans, there is no credit check associated with payday loans. The only requirements are that you must have an active United States bank account, while some lenders also require that you have a job. The relevant checks are done to ensure that your bank account is active and in good standing. If that is the case, you are eligible for the loan.
Interest Rates and Paying Back Installment Loans
One of the downsides of a payday loan is that you are paying a much higher interest rate compared to a credit card. The reason why lenders charge higher interest is because they are taking on a more significant risk, as the applicants do not go through any credit check.
The good news is that even with very high-interest rates of 350%, the dollar amount is very modest. For example, an individual who borrows $300 through a payday loan is only responsible for paying $15 to $20 in interest. That is a very reasonable sum, considering you are being provided with cash within hours into your bank account without any credit check.
Paying back a payday loan is a simple process, with reputable lenders providing a due date for the loan in the initial contract. Most payday loans are due within one to three weeks of the borrowing date. These are short term loans designed to assist individuals and families until their next paycheck comes through.
Use Payday Loans to Your Benefit
While a lot of people may dismiss payday loans as a useful financial tool, many individuals can benefit immensely from these loans. A payday loan means quick cash in your bank account, which is not possible through any other borrowing method.
Say you have to pay some bills within one or two days, or you have to put $200 into getting your car fixed, a payday loan can help you manage these expenses. Rather than spending a few days away from work because your car does not work, you can get a payday loan, get your car fixed, and earn your next paycheck with minimal interruption.
Individuals who do not have a clear plan for paying back a payday loan can run into trouble. These are short term loans that must be paid back within a few weeks. It is wise only to take out an installment loan if you are 100 percent sure that you can pay it back within the appropriate time frame.
Payday Loan Fees Put Into Perspective
Anyone taking out a payday loan indeed has to pay a lot of interest on the principal sum, even if it comes out to $15 or $20 in total expenses. But it is important to put these fees into perspective.
An individual who is considering a payday loan may have bills and expenses to meet in the coming days. What if that person overdrafts on their checking account? Most banks charge a minimum of $35, while some also charge insufficient funds fees for each transaction that is denied.
Now imagine your car breaks down and you cannot get to work. A single missed day of work is a lot more expensive than paying $15 or $20 for a payday loan that would allow you to get your car fixed immediately.
There are drawbacks to payday loans, but that is the case with any method of borrowing money. These short term installment loans provide a rapid source of emergency funds for individuals who don’t have any other options. They can often be the difference between incurring $20 or $200 in extra expenses during moments of financial difficulty. When used responsibly, payday loans are a lifeline to individuals and families around the country.