Many times, what borrowers need is not a grand loan but a quick fix solution to provide them with a small amount of money for pressing needs. If you find yourself in such a situation, loan options that offer you huge amounts may not be ideal. Instead, you may want to apply for a payday loan.
In many situations, payday loans are the go-to option for people who earn a weekly or monthly income. This is because they are usually able to pay off the small amount they borrow as soon as they receive their next paycheck.
Payday loans are also very popular and accessible. As a result, more people tend to think about it first before other types of loans. However, these are just a tiny fraction of the reasons why people opt for payday loans. There are so many more perks that follow when you choose to get payday loans online at renowned platforms like WeLoans.
In this article, we consider how payday loans work and some of the incentives that cause borrowers to take out this type of loan from online lenders.
How Do Online Payday Loans Work?
The concept of payday loans can be traced back to the 1930s when lenders used to grant employees an advance salary. In response to the goodwill, the workers would agree to modify their paychecks to reflect a date in the future. This way, they could pay the employer what they owe with the next paycheck.
Simply put, a payday loan is a form of financing that you ought to repay fully upon the arrival of the next payday. Typically, payday loans are short-term and can range from $250 to $1000, with a repayment period of two weeks to one month.
Unlike personal loans that have several installment repayment dates, payday loans can only be repaid in one lump sum. Furthermore, payday loans are often associated with high annual percentage rates (APRs), which can make them costly.
Can I Get Payday Loans With a Bad Credit?
This is a common question usually asked by individuals with a bad borrowing history. In most cases, bad credit borrowers have limited loan options. However, all hope is not lost. A large number of lenders today create special loan packages for bad credit borrowers, with one of such options being payday loans.
The reason for this leniency is that lenders are primarily bothered more with your ability to make full repayment than your credit history. As long as you can provide evidence of a regular income, you are likely to be approved for an online payday loan. Additionally, lenders typically conduct soft credit checks on your information before approving payday loans, which means that your credit score may not be the most important factor in the decision-making process.
If you are interested in learning more about payday loans, Nabila Yusuf, a financial writer of WeLoans can provide valuable insights. Her writings help borrowers with bad credit scores understand how they can be eligible for a payday loan.
What are the Perks of Choosing Online Payday Loans?
There are quite a lot of advantages that go into choosing payday loans and even applying for them online. Despite the fact that payday loans may be very expensive, these perks are convincing enough for most borrowers, especially when compared with what obtains on other loans.
Relaxed Application Requirements
When deciding whether to offer credit, conventional lenders typically consider the borrower’s ability to repay the loan through credit scores and several other strenuous criteria. Payday lenders, on the other hand, have less stringent requirements.
If you are considering a payday loan, there are a few key criteria you should meet in order to qualify. Firstly, you must be at least 18 years old. Additionally, you must have a valid government-issued photo ID.
Perhaps more important than all is that you must have a consistent source of income through employment, social security checks or retirement benefits. Finally, you must have an active bank account that is in good standing.
Easy Access at Lending Platforms
Payday loans are readily available across a wide range of financial institutions. From traditional banks to credit unions and direct payday lenders, there are barely any limits to where you can apply for payday loans.
Besides, unlike most conventional loans, you can get fast funding when you apply for payday loans. This is because most of these loans perform only a soft credit check, thereby making approval and funding swift..
Payday Loans are Unsecured
Payday loans are distinct from traditional vehicle loans, secured personal loans and mortgages in the sense that they do not require collateral. This means that the lender cannot legally seize your property, such as your home, in the event of default or nonpayment.
Despite being unsecured, payday lenders may still require you to provide your employment paycheck information. This assures the lender that you have a source of income which it can leverage in the case of default. Additionally, if you default on your payday loan, the lender may have the option to take legal action against you or transfer your debt to a collections agency.
Suitable for Bad Credit Borrowers
If you have a bad credit score, payday loans might just be the best bet for you. Asides from the fact that this type of loan has less stringent requirements, the financial information is subjected to only a soft credit check. This means that your credit score will not be the most decisive criteria in giving you the loan. So, even if you have a bad credit history and you can satisfy the lender that you have the ability to repay, you stand a great chance to secure approval.
Where Can I Apply For Payday Loans Online?
The most famous financial institution for receiving payday loans are online platforms called payday lenders. These are direct financiers that receive your application, run soft credit pulls, issue approval and send you cash. On the other hand, you may want to choose brokers to avoid putting all your eggs in one basket.
Brokers like WeLoans present you with payday loan offers from multiple lenders across your locality. You can apply by filling out the form on the broker’s website and comparing the offers you receive.
If you need a small amount of cash to cover expenses until your next paycheck arrives, payday loans can be a viable option. However, it is important to exercise caution and avoid predatory lenders.
These lenders often impose high fees and interest rates, making it challenging to repay the payday loan. As a general tip, compare loan offers from different direct lenders and only select the most comfortable option.