Payday loans can be lifesaver when you need cash advance but you are always recommended knowing how your loan works before applying for it.
Today, more than 12 million Americans have taken online payday loans once in their lifetime, sometimes even more. Short-term payday loans are unique and offer small amount for tenor of 1-4 weeks. By applying for payday loans you can get amount of $50-$1500, loan amount differs from one province to another. Many individuals apply for this loan to manage their daily expenses. Some of common features of online payday loans include:-
- Small amount of loan
- Single installment
- No Credit Check
- Instant approval
- Fast Transfer
Short-Term Payday Loans Interactive Guide
Although lender does not dictate how you can utilize online payday loans, most payday loans are applied in case of emergency financial situation. For instance, borrower may apply for loan for:-
- Medical Bills: Most of borrowers use online payday loans to give-off their medical expenses. Since many people are not covered with medical insurance, you can apply for payday loans to aid your financial situations.
- Credit Score Improvement: By opting for short-term loans you can also enhance your creditworthiness. When you pay back your loan within term dates, opt for credit enhancing loans to improve credit area in your bank. Some loans have credit enhancing characteristics, low rates and there is no credit check, overall they can boost your credit rating.
- Building or Auto Repair: Single individuals often use short-term loans paying off for mechanical issues, building issues, for example, and plumbing leaks and for other repairs. Opting for cash advance can meet need of hour.
- Utility bills: When you are short of money on home utility bills, getting online installment will assist you go forward for someday till you get your paycheck. Paying utility bills is one of most common reasons why people take short-term loans.
Before Moving To Eligibility Criteria, Here Is How Your Payday Loan Works
We know that payday loans are short-term loans and it aids borrowers to stabilize their financial life. Payday loan borrower gets direct transfer of funds into bank account, although in some cases borrowers write personal check for amount that is borrowed plus interest and sign over electric access to their bank account to receive and repay payday loans. Lender holds check until full repayment of loan; otherwise, lender can withdraw payment directly from borrower account on next income date.
Borrowers can redeem submitted checks by paying full amount. Payment amount of loan is small and it can fall anywhere from $50 to $1500, which is paid in one installment.
Requirement To Apply For Payday Loan
Potential borrowers should have steady income of $1000 and bank account to apply for online payday loan. Although payday lenders do not conduct a complete credit check or cross-question to determine borrower standing. Payday loans are given on ability of borrower to collect funds, not borrower’s ability to repay. This is one of features which make payday loan special and easy to apply. The requirement criteria for loans are regulated by CFPB.
Step By Step Process
- Borrowers fill out registration form online payday websites.
- Identification and bank account numbers are only documents needed.
- Loan amount differs in province and can range from $50 to $1500, depending on state law.
- Full payment is due to borrowers next payday; this duration is typically two weeks.
- Borrower either post-dated check to coincidence with next paycheck.
- Otherwise, borrower gives electronic access to withdraw funds from bank account.
- Borrower is usually charged interest rate of $15-$20 for every $100 borrowed.
How Soon You Get The Money
Almost entire payday loans working are based on instant money transfer but sometimes it can take up to 24hrs after your application is approved. Payday online lenders contribute to more than 83% of those who take payday loans offer instant application approval with immediate fund transfer.
Motives Of Payday Loans Borrowing
- Convenient Application: Getting payday loan online is easy as compared to going on payday loan store and waiting for application approval.
- Quick Roll: Funds in payday loan online is instantly transferred to your bank account. If borrower application matches criteria, then fund is transferred immediately afterward.
- No Entitlement: Borrowers can apply for short-term loans even with no proper credit rating; payday lender does not carry out hard credit queries.
- Flexible Fees: Sum of loan selected by borrower is likely to have less interest rate as compared to secured and unsecured loans
- Regulation and Law: Payday loan regulation and law are often regulated by CFPB and are in favor of both borrowers and lenders.
How Much To Borrow
Borrowing amount varies in different province; otherwise, it can also vary depending on your application meeting eligibility standards. If you have high income then usually lender approve considerable amount of installment loans. There is also restriction on getting maximum amount, just because particular lender has approved you for highest loan amount doesn’t mean that you have to get maximum loan.
Only apply for amount that you can pay back comfortably. If you are about to get a payday loan online, it is highly recommended to have exit strategy to pay back in full amount. It is always helpful to have financial strategy in place.
How To Repay Your Full Loan
In case you are business owner and obtain payday loan, then it is highly recommended to give a personal check to payday lender or ACH (Automated Clearing House). ACH has authorized to electronically withdraw money from bank account of borrower. Make sure to read complete contract carefully. Generally, borrower obtains loan and deposit checks that can be redeemed. Many lenders allow payday loans without credit score checks and without keeping redeemable checks.
What Could Happen If You Do Not Pay Your Payday Loans On Time?
When it is time to pay back your loan either you can directly transfer to payday loan lender or lender redeems balance from your account. In case, you don’t have funds in your bank account then lender may try couple of more times.
In case if each time payment is return as insufficient funds then this will affect your credit score. Online payday loans also make direct calls to their borrowers to pay back the outstanding balance and there might be increase of fees, interest and perhaps you have to pay penalties as well. Lastly, lender will transfer your case to third party loan collector.
Bad Credit Payday Loans Score Will Affect You
Bad Credit Score Will Affect You
When you keep paying your loan payment, your credit score is safe. But, with missing payments, your credit score can go south of good and you can be marked as risky borrower. In case of negative checking account balance, your case will be turned to another collection agency and so one loan can stem two separate collection processes.
Aggressive Collection Tactics
Payday lenders can turn your case to aggressive collection agency for outstanding balance. There could be lawsuit against you can then court will determine your legal obligation to pay. Although you cannot be arrested for failing to repay loan, it is best to avoid such situations.
What Are The Repayment Terms For Online Payday Loans?
Repaying loan is act of paying back money, which is previously borrowed from online payday lender. Returning borrowed funds happens through single payment or periodic payment. Here is list of tips on repayment terms for online payday loans:-
- Meeting The Full Payment: Borrower needs to payback complete amount of loans within payback tenor without any delay. Delay in making payment make borrowers eligible for increased rate of interest. As per research, around 58% of borrowers have trouble meeting monthly expenses.
- Paying Fixed Interest: On average, borrowers have to pay lender full loan amount and interest. As per research, only 14% of borrowers can afford enough out of their monthly budget to repay loan. This data help in explaining why most borrowers renew or renew their loans.
- Realistic Expectations: Although, setting realistic expectations might not be one of payback term but it can defiantly help to make scheduled payments. With proper planning, it is easy to give back full loan. Furthermore, it will help you to know complete information on your loan. As per research, 78% of borrowers rely on lender for accurate information.
- Eliminate Rollover: Many times half of borrower rollover their previous loan. As per CFPB rolling over you payday loans should not be practice often. It is for protection of borrowers from ending up in more debt.
- Clear Terms: Mostly borrower says terms are clear but still struggle to repay. It is essential to read terms and conditions before applying for loans. As per research, among those who said terms are clean only 46% of borrower could afford repayment.
How Much Extension Can I Have For A Payday Loan?
It is easy and convenient to take payday loan and sometimes short-term loans can be useful. But in case when you have fewer funds to pay back your loan then you can take following options: –
- Loan Extension: When you know in advance that it will be hard to pay back then perhaps it is best to ask for extension. Believe it or not, asking for extension is better than doing nothing. Payday loans lender generally avoid extension but when extension is needed you can submit application and get it done. Not paying loan and doing nothing will hurt your credit rating. Loan extension period varies from one province to another.
- Refinance Your Loan: Next, you can choose less expensive option to refinance your payday loan. When you ask for extension or rollover, but you are also going to put something down on what you own then it will be expected from you to pay at least full interest. You can refinance your payday loan as if you have taken new one and same interest rate will add up till next payday to pay it back. You refinance your new loan as well.
- Get Another Loan: When really in need, and while you have to pay first loan, you can do it by applying for second one. You can take another loan from different payday loan lender. Some states might not allow you to get more than one payday loan at one time. While in other you can wait for at least two to seven days in between and then get another loan. It is highly recommended not to go for another loan when you one that needs to be payback.
What Is The Repayment Period For Payday Loans?
One of advantage and disadvantage of applying for online payday loan is that they are only available of short-duration. Most payday loan online is required to be paid back within one month. Although can back pay sooner or go for extension that depends on individual to individual, but generally payday loan is given for one month tenor. It is advantage for borrowers that do not have to pay interest on their loan for more than one month.
On the other hand, short duration of payday loans makes it harder for borrowers to pay back. The short duration of payday loans helps borrowers to payback complete amount in one single payment. Otherwise, borrowers have to pay fees while trying to extend their loan because they fail to pay back loan amounts within one month tenor.
Payday loans are easy and affordable ways to make your financial situation stable. Anyone with emergency of paying bill can apply for this type of loan. There are minimum eligibility criteria for payday loans with minimalist requirements. Once you have decided to apply, you can simply follow steps mentioned in this guide.
With instant approval, you can get funds transferred to account immediately. One thing which is not mentioned in this guide is exit strategy. While taking loans is essential to have loan exit strategy. In other words, exit strategy is how you will be paying back loans about. This type of strategy will help you to plan and schedule your loan so that you face no hassle in paying back full amount within payment tenor.