Yes! We all have an emergency expense from time to time. So, you are no exception. You might need some extra cash for medical costs, a car repair, or emergency home repair expenses. Whatever be the case, you are exploring your options on payday loans online.
A word of caution about payday loans: Payday loans are extremely expensive and they can easily trap you in a debt cycle. You might want to consider personal loans instead which have a more favorable interest rate and terms.
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But before you apply for a payday loan, you should ask yourself if you fully understand it. Don’t worry! In this article, you will know all there is to know about payday loans. By the end of this article, you will understand;
- What Are Payday Loans?
- Payday Loans Interest rates.
- How To Apply For Payday Loans Online?
- Pros and Cons of Online Payday Loans
- Criteria of the best payday loans
- And where can you get payday loans?
What are Payday Loans?
Payday loans are short-term unsecured loans. You don’t have to provide collateral before taking this type of loan. You will have to repay the amount in full plus interest or fees immediately after collecting your next salary. Be careful not to default the repayment schedule because expensive additional fees await you if you default.
So what is the amount of a typical payday loan? Payday loans online often range from $100 to $1000. Depending on your salary range, you could even get an amount of up to $4000. Of course, it also depends on how much the lender is willing to give you.
Payday loans interest rates
Before applying for payday loans online, you should at least know the interest rates you have to pay. Unlike other types of loans, payday loans have a higher interest rate. The interest rate is this high since you have to repay the loan plus interest because of the short period.
Typical payday loans interest rates range from 15% – 30%. But this number shouldn’t fool you since you pay way more in terms of Annual Percentage Rate (APR). Let’s use the example below for you to understand correctly.
You take a payday loan of $500, and you have to repay this loan on your next paycheck, which is in 3 weeks. The fee you will have to pay as interest is $100 (I used $20 for every $100, which is 20%). If you calculate this annually, you will be paying 347.6% in APR.
Now let’s look at how you can apply for payday loans online in the next section below.
How to apply for payday loans online?
Unlike years back, applying for a payday loan nowadays is pretty easy. Now you could easily apply for a payday loan without leaving your house. You can complete the simple application process on your laptop or your phone. Before you start the application process, you should make sure you meet the following requirements:
- 18 years or older
- Government Issued ID
- You have a Social Security Number
- You have a job for at least three months. You can use your payslip to confirm your proof of income.
- An active Checking Account
- A valid Email address and Phone number
If you meet the above requirements, you could get approval within a few hours of completing the application form. In case the lender approves your application before 10:30 AM, you will probably get the money in your account before 5:00 PM the same day. But if you apply after 10:30 AM, you will get the cash in your account the following day.
Pros and Cons of Payday loans Online:
Before getting this loan, you should at least know the pros and cons of online payday loans online. Now, let’s start with the pros.
1. Easy Application:
Most lenders who offer payday loans are available 24/7. These lenders even offer online applications which are very easy to complete with immediate approval. Easy application and instant approval make payday loans attractive if you are in dying need of cash.
2.No Strict Requirements:
The main reason payday loans online became so easy for individuals who need instant cash are the few requirements. Unlike traditional loans, you will need to meet many requirements to make sure you can repay. But with an online payday loan, all you need is;
- Be older than 18yrs
- Government ID or Social security Number(for the US)
- Be employed for at least three months
- Have a Current active bank account.
3.No credit Check Needed:
Another significant aspect of a payday loan is that you can still get instant approval irrespective of your credit score. The lenders can still approve your loan if you have a low or bad credit score. With payday loans, there is no need to check your credit score. This reason is why payday loans online have become very attractive.
One side note to consider when you have a bad or low credit score. With a bad or low credit score, the payday loans you will get could come with a higher interest rate. You could also pay hefty penalties if you miss the repayment schedule. With that out of the way, let’s talk about the cons of a payday loan.
1. High-Interest Rates:
The interest rate of personal loans or credit cards is significantly lower than that of payday loans. A payday loan is costly for borrowers due to higher interest rates. You could end up in a vicious cycle of debt if you are not careful with on-time repayments.
2. Time Constraints:
Besides the high interest rate of a payday loan, the time constraints also become the problem. Some lenders offer up to 3 months to pay the loan at the dedicated repayment schedule. But most payday loans are paid out at once, including the interest.
This repayment all at once could be a problem for you since you also have other expenses like Bills etc. So make sure you have good planning by considering how you could effectively repay this loan.
3. Collection Practices:
When you take out a payday loan, you and the lender agree to a deal that you must commit to. You have to respect the terms and conditions like repayment schedule and amount. Since most lenders are extra cautious, they might ask you to authorize a Continuous Payment Authority (CPA).
If you authorize a CPA, the lender will continuously deduct money from your account until they recover the loan amount. This collection practice makes payday loans a bad choice if you don’t have proper budget planning. But if you don’t have basic budgeting skills, you should explore other options before taking a payday loan.
What are the best online payday loans?
You should be aware of bad and shady lenders. Some lenders are shady, and they can screw you over. If you are not careful, you might even fall prey to online scammers. But don’t worry because we have done the research and come up with the best online payday loans.
Before applying, here are the questions you need to ask yourself;
Is the application process easy?
You do not want to start filling out countless long application forms just to have a couple of 100 dollars. The best instant cash lenders have an easy 3 to 4 pages online application form. You can apply right away using your computer or mobile phone.
How Fast is the approval process?
In the first place, the reason for a payday loan is to solve an emergency you find yourself in. So, getting the cash on time is very important. The best lenders will approve your application within a few minutes or few hours tops. You will receive the money in your account within a few hours or the following day latest.
Is the interest rate low?
Some lenders will charge you a whopping 40% + interest rates. But the best online payday loan lenders will only charge you 15% to 20%. So, make sure you know how much you will be paying as interest on the amount you borrow.
Does the lender ask you for upfront fees?
Genuine lenders will never ask you to pay upfront before receiving your loan. If anyone asks you to pay any fee before getting the loan, run away as fast as you can. Scammers are trying to take advantage of vulnerable people in distress. So, take note of that.
Where can you get a payday loan?
With extensive research, we have put together 2 of the best places to get online payday loans. We consider the four questions in the section above when putting this list together.
Caution: Only Use the companies below if you have completely exhausted your options. Payday loans are extremely expensive and dangerous if you can’t repay in full at once. There are other cheaper options and alternatives at the bottom of this article.
In the end, a payday loan is a quick-fix type of loan. You will have the money you want hassle-free. However, you should reconsider the drawbacks and be extra cautious before taking out a payday loan. Only take out a payday loan for necessities and not luxuries.
So, what are your thoughts? Have you ever taken a payday loan? Are you planning to take one? If so, enter the amount you need in the form below to apply for a payday loan.