Sadly, only 41% of Americans are able to cover an emergency of $1,000 with their savings. If you’re in the 59% that can’t, then you might be worried that an unexpected event can bankrupt you.
But know that there are ways to recover from an emergency, all without losing all your money. For instance, there are online payday loans where you can get money in a pinch.
Do you want to learn more about this type of loan? Then read on. Here’s a guide to payday lending so you know about this loan option.
Payday loans are a type of loan you can take out if you’re currently employed. It’s a very short-term loan, as you’ll have to pay it back with your next paycheck (hence the name). Considering most people get paid either weekly, biweekly, or monthly, the term length is extremely short when compared with other types of loans.
If you have poor credit or none at all, this is a very accessible type of loan. Since the loan is backed by your next paycheck, there are plenty of lenders who don’t care about your credit score before approving you.
The loan amount is also small compared to other loans. In most cases, you can borrow up to $500. While it’s not that much, it can definitely make a difference when it comes to vital things like buying groceries or paying the rent.
As you may have guessed, online payday loans can be obtained through the internet. This eliminates the hassle of visiting lenders in person to apply, get approval, and receive cash.
To get a payday loan, all you need is employment and a bank account. Unlike most other loans, this type is not an installment one. This means you pay the entire amount back in 1 go instead of multiple payments.
When you sign for a payday loan, the lender will get your bank details. They’ll usually give you money right away, which is a huge plus. Then, when you get your next paycheck through direct deposit, the lender will take that amount from you immediately.
After this, you should be completely done with the loan. However, if you aren’t able to cover the full amount and end up over-drafting, then the loan rolls over to your next paycheck.
The biggest pro of payday loans is you can get cash in your hands basically instantly. If you have a sudden emergency pop up and you don’t have enough money to cover it, then a payday loan can be a lifesaver.
In addition, as we’ve mentioned above, in most cases, you don’t need a decent credit score to get approval for a payday loan. So long as you have a job, then you’ll most likely be eligible for a payday loan.
Payday loans might sound like a great idea, but do know that they come with a huge con: they have insanely high interest rates. APRs range from 300% to 700% in certain states! Compare this to some of the worst credit cards; their interest rates don’t come anywhere near even 100%.
If you’re living paycheck to paycheck, then taking out just 1 payday loan can quickly send you into a spiral of debt. This is why most financial experts recommend you avoid taking out payday loans unless you’ve absolutely exhausted other options.
If after reading this, you still think a payday loan is something you might apply for in the future, here’s how to get one.
Do a search for payday loans online. You’ll generate lots of results, so take your time to research each one thoroughly. You want to make sure you pick a payday loan lender that has a good reputation, as they’ll have access to your bank account.
When you’ve selected a lender, fill out their online application. They’ll respond within minutes and will disperse the loan amount to your bank account not long after.
If you want to avoid getting trapped in a cycle of debt but still need money fast, know that there are other options available besides online payday loans.
For example, you can apply for a title loan. This is where you offer your car’s title up as collateral for a loan.
With this type of loan, not only can you borrow significantly more money, but you can still get cash almost instantly. In addition, you can pay back the low in installments instead of 1 lump sum.
The best thing is the APR is much lower than with payday loans. And you can still use your vehicle while making payments!
The only drawback is if you default on your loan, the lender takes your car. But so long as you’re confident you won’t default, then this a title loan can be an excellent choice to consider.
Now you know all the pros and cons of getting online payday loans.
As you can see, they can certainly help you out in a flash when you’re in a tight spot. But considering payday loans have extremely high-interest rates, it’s very likely that once you take one out, you’ll quickly become trapped in a cycle of growing debt.
Because of this, you should only go for online payday loans if you really need to. Otherwise, it’s much better to consider other types of loans, as their terms are a lot more favorable.
So before you opt for a payday loan, take a look at your other choices, such as title loans. You can still get the money almost instantaneously, drive your car while repaying, and not deal with excessive APRs.
Are you ready to get a title loan online via your phone? Then apply with us now!