How To Get A Bad Credit Payday Loan
Payday loans are a type of lending that provides a small amount of money for a short period of time against a borrower’s next pay check. They rely on borrowers having previous employment and income records. These types of loan are also referred to as payday advances, salary loan, payroll loan or advance loan.
The regulations guiding payday loans differs widely between states, with some providing stricter oversight than others. However, legislation generally defines the maximum amount of such loans, whether or not the interest rate and other applicable fees are capped, as well as acceptable practices during the loan repayment period. In the U.S, federal guidelines are outlined in the Uniform Small Loans Laws.
People generally seek to take out a payday loan to offset a temporary cash flow problem or take care of financial emergencies that cannot wait until the next pay check to be resolved. They are not meant to be a form of income, as receiving such a loan put the borrower in debt for about five months on average.
Bad Credit Payday loan to offset a temporary cash flow problem
Despite this, studies show that many borrowers use payday loans to take care of regular, recurring expenses. Research shows that most of the people who take out payday loans earn 30,000 dollars or less per annum, with 18 percent of borrowers earning below 25,000 dollars.
Taking out a bad credit payday loan
It can be tough, if not impossible, for people with bad credit scores to get a loan from a traditional lending institution such as a bank. This is why it is important to find a viable option when the need arises, while also rebuilding one’s credit.
The first step to take when applying for such a loan with bad credit is to check if you are eligible and establish if you will be able to repay it. Eligibility guidelines vary from one lender to another, but the general ones include:
- Proof of U.S citizenship and age over 18 years
- Evidence of employment or a regular, continuous source of income
- Social Security Number
- Proof of residence in the state the loan is applied from
- Proof of an active checking account that has been open for a specified period of time
- Contact information, including a verified phone number and email address
One can apply for bad credit payday loans either through visiting the lender’s physical location or, more recently, through the Internet. It is a relatively short process and, if approved, one can receive the funds within five minutes to 24 hours.
Criticism of payday loans ranges from that they further impoverish low-income households, they use unethical advertising practices, are subject to very steep interest rates, or use predatory or intimidating means of debt collection in case of default.
However, if properly managed, bad credit payday loans near me can have numerous benefits:
- They avail a mandatory service to people who would not be able to get access to loans otherwise
- They raise household welfare by decreasing credit constraints
- As a profitable industry, they help increase the overall wealth of states
Bad credit locks a lot of people out of receiving lending from traditional financial institutions, making payday loans one of their only viable options.
Online Payday loans are a fast and convenient way to solve unexpected money problems. However, one must always ensure that they repay the prescribed amount must be paid on time in line with the repayment schedule agreed upon. Otherwise, the borrower is subjected to extremely high fines and fees which may trap one in a continuous cycle of debt.