What Is A Payday Loan?
The term almost speaks for itself. It is a short-term loan that is intended to be used to cover some immediate expenses that you have coming your way. The loan length may vary from as short as 7 days to as many as 45 or perhaps more depending on the lender. The point of borrowing for such a short period of time is to use that loan money to pay for some emergency expense. These loans are not recommended for long-term or larger expenses.
What Kind Of Person Can Use A Payday Loan?
There are a lot of people who may come to the point where they borrow a payday loan. It is something that can save a person from paying hefty fees on late payments or overdraft fees. It may also be helpful in preventing you from defaulting on an important expense or payment such as your electric bill or your car loan payment.
Not only can a person be embarrassed by not being able to make payments on essential things like electricity and a vehicle, but they can also end up in a spiral of not being able to take care of the essentials in life. A payday loan can be just what they need to avoid these unfortunate situations.
What Kind Of Credit Score Do You Need For This Kind Of Loan?
Your credit score is not a concern to payday lenders. They know that many people who come to them looking for a loan are not going to have a stellar credit score. The point is to provide funds to those who are not able to get them from traditional sources. Payday lenders won’t even check your credit score. Instead, they only require proof of employment and something showing that you have an open checking account that they can deposit the funds into. If you have both of those things, then there shouldn’t be any other barriers to your access to these funds.
How Long Is The Approval Process?
This is among the fastest types of loans that you can ever get. The approval process from start to finish shouldn’t take much more than fifteen minutes in most cases. You will need to have your documents ready and at your side to complete the process and you can get through it quickly. The lenders will generally allow the loan to go through as long as you have a checking account and a job. You will be able to start to figure out your next steps on the journey towards freedom from your financial woes by taking the loans you need now and sorting things out.
Are There Regulations?
You should always check on regulations in your state and local region before making any assumptions about what the regulations on payday loans may be. It could be the case that your state or city regulates or even restricts payday loans altogether from being permitted in your area. If that is the case, then there is little you can do to get around that other than to travel elsewhere for your loan.
What Is The Alternative?
Unfortunately, the alternatives to payday loans can get very ugly. The fees that other financial institutions want to charge for having a late payment or some other problem are outrageous. The APR rates on those fees are exceedingly high, and few people realize that they could avoid all of that trouble if they just borrowed this loan instead.
Take the example of a bank overdraft fee for instance. Imagine that you overdraft your account by $100 and then have to pay an overdraft fee of $35. That is thirty-five percent interest per week. Those rates are way higher than what you might expect from a payday lender. You could avoid the overdraft fee entirely if you just borrowed the payday loan in the first place. Therefore, it could actually be a cheaper alternative to borrow the payday loan in this scenario.
Do Payday Lenders Report To The Credit Bureaus?
The payday lenders do not actually report to the credit bureaus. They do not access your credit score at all, and they do not report late or missed payments. Obviously, you want to avoid late or missed payments to a payday lender or any lender at all, but at least these won’t impact your credit score. The only problem here is that you could be on the hook for more fees or other things you don’t want in your life if you make a habit of missing payments. Just don’t do that.
All in all, payday loans are basically exactly what they make themselves out to be. They are an alternative to a lot of other uglier paths that you may have had to take otherwise, and they can help you get your footing back when you take a stumble on the road to financial peace and freedom.