When you find yourself in financial difficulty, getting quick cash with minimal effort becomes a priority. There are several ways to achieve this goal, including requesting a salary advance, selling an asset, or borrowing from family or friends.
However, this is not necessarily a realistic possibility, leaving you in need of an alternative. To bridge this gap and secure the funds you need right away, why not consider getting a payday loan?
What Are Payday Loans?
Payday loans are short-term financial products that aim to lift borrowers out of immediate debt. You may have to travel for a family emergency or you are running out of funds to pay your electric bill. Whatever the reason, you can take out a personal loan online to help you until you receive your next salary, pension or benefits payment.
Given the current conditions, with peaks in coronavirus infections, what makes a payday loan even more appealing is that you don’t have to leave your home to get one. Online applications are straightforward and don’t require as much documentation as conventional loans.
Terms and conditions
Like any debt instrument, a payday loan comes with conditions. It must be repaid, plus interest, over a specified period. You can negotiate the number of installments required with the lender. However, loan terms rarely extend beyond three months and only if they exceed an amount specified by the lending company.
Therefore, you won’t have three months to pay back a few hundred dollars. Lenders expect loans to be repaid in full within two or three weeks, depending on how long it takes before your next amount of income is paid.
Missed payments incur additional interest and mean paying more than you might have had if you had met the repayment schedule. The interest rates charged on short term loans are higher than those of their term counterparts. This means that a missed payment will add a significant amount to your balance.
Apply for a personal loan
Each lender has unique requirements, but applicants should expect to provide the business with proof of identity, age, income, and bank details. A payday lender will also want a verified email address and cell phone number to contact you. At a minimum, applicants must be 18 years old, although some companies may specify that their products are only available for 21 years and older.
Lenders reserve the right to examine your credit score before offering you a loan. However, many do not rule out applicants with bad credit history. Keep in mind that defaulting on a payday loan could lower your credit rating, which would affect your ability to get other loans in the future.
Is A Payday Loan Necessary?
Like any other debt, a payday loan shouldn’t be your first option in a crisis. Explore ways to cut expenses, make deals with people you owe money to, or raise money elsewhere. It is only after you have ruled out such an option that you should consider contacting a payday lender.
Borrowing money can get you into a cycle of debt, where you borrow more to pay off existing debt. It is a hamster wheel that is difficult to escape. If you find yourself in this situation, seek advice from a debt professional to explore alternatives.
Awareness of lenders
Some companies operate in a seemingly legitimate way, enough to convince you that they are being honest. However, some are no better than loan sharks, looking for easy prey. Research different lenders before choosing one and make sure that they are registered with the proper authorities.
A lender who is reluctant to give specific repayment amounts, insists on taking something like your passport as collateral, or does not provide you with a written contract should alert you. Some offer interest rates that seem much lower than others, but there are usually hidden charges, or the loan shark uses them to trap you in the debt cycle.
The advantage of online payday loans is that you can easily establish their veracity and check the reviews online to get an idea of how they work. Plus, it gives you access to hundreds of lenders, not just those who operate from storefronts in your area.
There is a 14 day cooling off period after committing to a payday loan. During this time, you have the legal right to withdraw from the contract. If you decide that borrowing the money was a mistake, you can pay it off with interest within two weeks.
Make sure that this cooling-off period is included in your contract so that you can take advantage of it if necessary. Too few borrowers read the fine print of a loan agreement, which could put them at a disadvantage. In addition, they are not always aware of their rights as borrowers. It is the customer’s responsibility to know their rights and they cannot rely on the lender to tell them.