Payday loans are small short-term sums ranging from $100 to $2500. These loans can also be called “cash advance,” “paycheck advance,” “fast loans,” or “no-credit-check cash loans.”
Payday loans are considered unsecured money meaning that they do not require collateral to secure the loan. Collateral is something brought by the borrower to back up the loan. If the borrower defaults, the lender may repossess the collateral.
Interest rates for payday loans are relatively high. For example, lenders may charge from $10 to $30 per $100 borrowed. Moreover, the annual percentage rate (APR) can even reach 400%. However, payday loans are due for about a month or until the borrower’s next paycheck. Therefore, for this period, the APR will not be calculated as high as for loans with longer terms; thus, it won’t ruin the client’s financial stability.
Payday loans are provided by local banks, credit unions, or online lenders. However, a lot of Americans choose online lenders, as their requirements are not as strict as traditional banks’ obligations.
Bad Credit And Online Payday Loans
To the borrowers’ joy, online lenders providing payday loans generally do not run a hard pull. The first advantage is that the credit history won’t be ruined by a hard credit check. The second benefit is that the clients with poor credit scores are welcome for online payday loans and can still be eligible for cash advance loans. Thus, the term “no-credit-check cash loans.”
How to Apply for Online Payday Loans
Today, various websites offering loan services are available online. Therefore, the borrowers should only search for the best opportunity and work with the chosen website. While searching, the clients should compare interest rates, loan terms, and online lenders’ other requirements to make the best choice suitable to their needs.
Once the platform is selected, the customer should read and adhere to the terms and conditions of the website and privacy policy. Note that the platform only gathers the data and provides it to its network of third-party lenders. It does not determine the interest rates or other loan terms. Thus it is essential to contact the online lender before having the money transferred into the bank account.
Loan processing consists of three steps:
- At the beginning, the borrowers should fill out an online application form suggested by the website. Online requests for payday loans usually require personal data of the clients, that include:
- Name and surname
- Age (18 years old and above)
- Home address (US residents only)
- Email address
- Phone number
- Social security number
- Government-issued ID
- Income source
- Active checking account.
As mentioned earlier, payday loans are unsecured loans; thus, a steady income is required for the leaders to feel confident about the borrower’s ability to pay the debt back. The bank account info is necessary for having the money sent directly into it.
- The second step is for submission. When the website gathers the information shared by the client, it provides the data to its extensive network of lenders. They review the case simultaneously, which increases the customer’s chances to get approved quickly.
- If approved, money is directly deposited into the borrower’s bank account.
Payday Lending Statutes in the US
It is important to know that each state has enacted legislation regulating payday loan procedures, which either prohibits or allows payday lending. Payday lending is legal in 37 states, according to the National Conference of State Legislatures. So, before you decide to obtain a payday loan, research the Legal Status of Payday Loans by State 2021.