The last few years have seen a rise in the number of people who are trying to get payday loans online. In recent years, more and more Americans have been using this type of loan as a way to solve their financial problems. Here we take a look at both the advantages and disadvantages of taking out an online payday loan from one of America’s leading direct lenders.
Quick Access
Even if you have a history of bad credit, getting access to the money you need is easier with an online payday loan. The approval process can be completed in less than 24 hours and once your application has been accepted, the funds will usually be deposited into your account within one business day. In stark contrast to other types of loans or financial products from traditional lenders, fast cash from online lending companies doesn’t require any collateral either!
More flexible repayment terms for borrowers
In general terms, interest rates on these kinds of loans are very high but they often don’t charge pre-payment penalties which means that making early repayments won’t cost you anything extra – this makes them ideal for people who may not have savings available at short notice when they find themselves in a crisis situation. In most cases, you will only need to repay the amount borrowed plus fees and interest when your next payday rolls around so there is no pressure on you to pay back any more than what was originally agreed upon.
No collateral involved
Another great benefit of online payday loans is the fact that it isn’t possible for lenders to seize any property you own or take out a lien against your bank account. This means that even if you default on your repayments, they aren’t able to come after your car, home, or other assets in order to get their money back. Because there’s no collateral involved with these kinds of loans, the only way you can lose everything is by not repaying them at all – but given how difficult this would be (due to the penalties and high fees), most people simply choose another repayment option instead.
A fast and simple process
Filling out the application is very easy and there’s no credit check necessary so long as you meet all of their other requirements. Online payday loans tend to be available to most people who are at least 18 years old, have a steady income that meets or exceeds their monthly expenses, and own a checking account (you can use your savings if you don’t want to do this). The lender will also need proof of legal residency in the United States before they approve an online loan for you too.
According to Usman Konst of KashPilot, “The most important thing about online payday loans is that they offer fast service and approvals regardless of credit history. It doesn’t matter whether you have bad credit or no credit. You can get approved for an instant loan in just five minutes.”
Interest rate calculations and Credit Checks
Lenders will need to perform a credit check in order to determine the chances of you defaulting on your loan. Unfortunately, this means that if your score is lower than 650, then it may be difficult or impossible for you to get approved – especially with some lenders who only accept applicants with at least an average rating of 660+.
Try not to get caught in a cycle
Although taking out online payday loans can be a great way of solving an emergency financial crisis, they may make it more difficult for you to get approved for other types of credit in the future. This is due to how some lenders report your repayments and missed payments on time directly to the Credit Reporting Agencies (CRAs). If this happens, it can cause your credit rating to be lowered which means you’ll have to pay higher interest rates for other types of loans including mortgages, car financing, or even student education.
The less money you borrow from payday lenders the better! It’s important that you take out only what is absolutely needed and try not to get caught in a cycle where it becomes increasingly difficult to make ends meet. If you can get by without taking out the loan at all, it’s always better that way because there will be no risk of having your credit score damaged and other opportunities missed as a result in the future.
Legal hassles
While it isn’t possible for lenders to seize your assets in most cases, there are some exceptions where they can do this. For example, if you have taken out a car title loan or another type of secured online payday advance then the lender may be able to repossess any vehicles that you own until your debt is paid off – even if you have already paid off the money owed.
You should always be wary about taking out more than one online payday loan at a time because it can get difficult to manage them all, especially if they are due on different dates or result in too many overdrafts on your checking account – this means having to pay even more fees!