With dozens of loan types out there, making a decision when you need to borrow money can become complicated. Plus, who has the time to research every other loan type when you only need to borrow money until your next salary so that your bank isn’t dried out?
A payday loan is always an option for such circumstances. While you would’ve heard of the term floating around, if you don’t have much information on payday loans and their benefits, it’s best to start there. We’ll run you through everything you need to know about payday loans.
What are Payday Loans?
You can find a payday loan through brokers like WeLoans, which can be helpful to save your time and energy. However, before that, it is important that you know what a payday loan is, some important details and requirements for it, and how much money you can borrow.
A payday loan, as the name suggests, is a sum of money, usually small, which you have to repay on your payday. So, basically, you get a portion of your income which you get before your payday, and when you get your salary, you have to pay off that amount. Hence, a payday loan usually has to be paid off within 2-4 weeks so that it can be used as a temporary solution.
Some lenders have a condition that instead of repaying on your payday, you will be asked to repay from another source of income such as social security or pension.
The main necessary details that are required from an applicant are a bank account and the applicant’s ability to verify their income and identity.
Although this is not always the case, some payday lenders allow the applicants to renew or “roll over” their loans. The applicant has to pay some additional charges, after which the lender extends the repayment period to help facilitate the applicant.
For more information on online payday loans, you’ll find numerous insightful resources by a financial writer from WeLoans named Nabila Yusuf on the website.
Features of Payday Loans
If you’re not 100% sure whether you should go for a payday loan or choose another type, here are some pros and cons to help you reach your decision with more certainty:
- No Hard Credit Check: Payday loan is one of the few types of loans that do not involve a hard credit check. Whether you have a bad or light credit history will not be considered as significant as other loan types while a lender goes over your application. So, a payday loan is a great short-term fix for people with bad credit history.
- Very Few Requirements: Many applicants find it very convincing that a payday loan has fewer requirements than other conventional types. If you are in dire need of instant money, you would rather go for a loan that has a less strict acceptance criterion compared to banks or other high street institutions.
- Unsecured Loan: Some types of loans ask the applicant to stake their home, car, or any other asset as security until repayment, and are called secured loans. Payday loan is an unsecured loan and has no such requirement. Hence, there is no possibility of putting your worthy possessions at risk while going for a payday loan.
- High Interest Rate: With so many benefits, there had to be a few drawbacks as well. The biggest con of a payday loan is the high interest rate. The APR on credit cards is 12-30%, compared to a whopping 400% on some payday loans.
- Not Available in All States: Another drawback of payday loans is that it isn’t available in all states. If you’re living in any of the 13 states that outlaw payday loans, you won’t be able to get one.
How Much Money Can You Borrow for a Payday Loan?
Payday loans work in such a way that you get a loan based on your income. So, the amount of money that you can borrow varies from applicant to applicant.
The maximum amount that you can borrow by a payday loan is around $5,000, but to get that amount, you should have an exceptional credit score. Even if you have a credit score of 550, there is a rare chance of getting anything above $1,000.
So, although payday loans have fewer requirements and lenders do not reject applicants based on credit history, they do give it a look and go for a soft credit check.
Typically, a payday loan ranges anywhere between $100 and $500 dollars. For this reason, a payday loan is considered a good solution to resolve a small and short-term financial situation.
How to Apply for a Payday Loan?
Now that you’re familiar with the basics of a payday loan, you might be interested in getting one and preferring this over other types of loans. If that’s the case, you can apply for one right away by using the services of WeLoans.
The application procedure is quite simple and convenient, and if you follow these instructions step-by-step, you will most likely face no difficulty:
Fill the Application
The first step to getting an online payday loan from WeLoans is to head up to the company’s website. There, you will either find a “Get Started” popup or an “Apply Now” tab.
By clicking on them, the website will redirect you right to the application form. Even though the procedure of filling the form is pretty self-explanatory, you will also be provided with instructions if you need further assistance. Once you’re all done, submit your application.
Finalize a Deal
After submitting your application, you will have to wait for some time while your application is forwarded to the company’s extensive network of lenders. Go over the offers, and once you’ve made up your mind, finalize a lender.
Get Your Money
After your deal is finalized, you might have to fill out a few official documents and forms. Once the procedure is completed, the lender will deposit the money in your bank account as immediately as possible, which is usually within 1-2 days.
Online payday loans bring a range of benefits; there’s no debate on that. Quick funding, bad credit acceptable, and minimum eligibility; sometimes, that’s all you need to balance your finances for the upcoming weeks until your payday arrives. Next time you need urgent funding, don’t overlook the option of applying for a payday loan.