If you are running short of money, you are likely in search of smart ways to get instant financial aid. Every day millions of people search online for a quick way to get money.
It's no secret that having a poor credit score can make it difficult to secure personal loans or instant cash. You may be wondering if payday loans are a good option?
Last month, the CFPB announced that it will be reconsidering controversial new rules that would have dramatically altered the payday lending industry. The rules were expected to reduce lending volume and were one of the last actions of the former Obama-appointed director. This announcement is good for consumers like you as policies are in place regulating the payday lending industry and making it safer for consumers.
So while there aren't many loan options available for bad credit score holders, you still have options. The good news is that online payday loans for bad credit are specially designed for helping people having an adverse credit background. This article will help you obtain all the essential information about bad credit payday loans.
What is a Bad Credit Payday Loan?
A bad credit payday loan is a form of an unsecured personal loan designed for individuals with bad credit or no credit background. It’s short-termed financial assistance until the next payday.
It is easy to obtain one online, and most people can take out a payday loan at any time. There are a few other terms used for payday loans, and they are also known as:
- Payday loans
- Unsecured loans
- Cash advance loans
- Payday cash advance
- Instant loans
If you really need a payday loan, you should know about terms and conditions, limitations, upsides as well as downsides, and all the other aspects before taking one out.
Components of Payday Loans for Bad Credit
We'll start with the basics. All kinds of loans (not just payday loans) are comprised of three basic components:
It is the total amount of money that you borrow from the lender.
Interest is added on the money paid to the lender for lending you the debt. The interest on money depends on the ARP and can vary from lender to lender.
It is a guarantee or security that the borrower puts on the account. The lender can claim this collateral if the borrower does not repay the loan on time.
Eligibility Criteria for Applying for a Payday Loan
The lender will lend you the cash if you meet the given requirements:
Above the age of 18 years old. Payday loans designed for adults.
Reliable Source of Income
Have some reliable source of income (you should be able to repay on time).
- Legally verified citizen of the state
- Clear image without any criminal background or allegations
- An active and verified bank account
How Much Can I Get?
As these loans are short-termed, they have a very little time span that can be of one week or two. So the amount lenders lend is also not too much. You can get up to $1,000 at any time.
The return rate of this amount comes up with a high-interest rate, but if you put something as collateral, you can get a lower interest rate while the loan amount can also be higher.
Pros and Cons of Payday Loan
Pros of Payday Loans
Cons of Payday Loans
|They are the ray of light in the darkness. Payday loans are helpful when there are no ways around||Comes up with a higher APR|
|A non-intrusive process of application submission||If you are unable to pay back on time, you may be caught into a non-ending cycle of debt|
|Bad credit payday loans are unsecured loans, (without collateral)||A borrower should be beware of scammers and disreputable lenders|
Online portals are available providing swift and easy access to payday loan
|You are not bound to long-termed contracts, your payment will be over as soon as you repay|
Steps to Apply for a Payday Loan
If you want to get an affordable payday loan online, follow these following steps:
1. Compare your options
It’s important to compare different payday loan lenders before choosing one. Compare between their loan amount, repayment terms and conditions, rules and regulations set by them, the interest rate and APR, and select the one that meets your needs.
2. Analyze the eligibility criteria and review the terms and conditions carefully
If you have a bad credit score, Payday loan lenders do accept your application but still, they have some requirements. You have to fit in the given criteria.
3. Borrow according to your affordability
Don’t overestimate your affordability and budget; only borrow what you can repay easily.
4. Keep in mind the costs and fees
Make sure you are aware of the costs and fees. Payday loans range in size from $100 to $1,000, depending on state legal maximums. The average loan term is about two weeks or so. Loans typically cost 400% annual interest (APR) or more. The finance charge ranges from $15 to $30 to borrow $100.
Tips on Getting a Payday Loan with Bad Credit Online
If your credit isn’t great, it’s still possible to get a payday loan with bad credit online. But your choice of lenders will probably be limited, and the interest rate could be high.
You need money but have a bad credit score? What will you do? Which option is best to choose? Is there any chance to get a payday loan while having bad credit at the same time?
So many questions are arising in your mind that you are probably stressing out. You must be humming and hawing over the decision whether to get a loan or not. When you are considering a bad credit loan, a short-termed or payday loan is the finest elucidation to your financial requirements. It’s luring if you get a chance to pay all your debts within a week with the help of bad credit payday loans. Isn’t it?
Well, it is not a big deal to get a bad credit payday loan. The only thing that could happen is that it could become more complicated if you don’t understand the procedure well. When it comes to bad credit borrowing, you should go for a loan that actually relates to your affordability. Finding the best suitable and affordable loan according to your financial condition is the key to avoid future risks and crises.
Get answers to your questions before applying for payday loans for bad credit
In case of serious financial calamities, you have to be smart enough to deal with the debt and handle the situation. There are tons of lenders offering you tempting deals and loan packages when you have an awful credit score, thus they manage to trap you in the dung of never-ending debts. If you play it smartly and choose wisely you can escape from lenders and save your financial prospects. Below are a few important questions that you should ask before taking out bad credit payday loans. The answers to these questions will lead you towards the right decision making.
- Ask about interest rates?
- Amortized or a non-amortized loan?
- Can I afford this loan or installments?
- Is my financial background being reviewed by the lender?
- What is the customers’ feedback about the lender?
Ask about interest rates
It is a fact that interests in bad credits are higher when compared to good ones. As a result, if you have bad credit, the first point you will need to ask is about the monthly and annual interest rates on payday loans. When you are looking for a short-termed /payday loan, expect an interest rate of 12-15% on the actual amount: e.g. $15 interest on $100. Rates of interest can vary according to your credit score. These high rates are just because you are in a state of financial emergency thus, you are willing to pay the interests at any rate.
In addition to annual interest rates, you also need to give a glance at the APR (annual percentage rate). Different lenders offer different rates. If you compare the loan lending market, you will figure out the best suitable lender who is offering comparatively less interests and APR.
Amortized or non-amortized loan
An amortized loan is a loan whose payment is paid down over a long period of time, all the way through equal installments. Amortized loans do not charge interests as a whole as they are charging the latters on your payment accumulated within a period of time. This loan is crucial to avoid the trap of a debt cycle.
Can I afford this loan or installments?
As mentioned earlier, bad credit payday loans have high rates of interest, if a person is already surrounded by the debt’s dark enclave. The situation where at the end of the year one finds himself in even more debt and has to re-scrounge another loan to pay previous dues and so on needs to be avoided. So it is important to make sure that you can pay the loan with interests at a committed time or do not apply for one.
Is my financial background being reviewed by the lender?
Bad credit loans are also known as “no credit check loans”. They are specially designed to assist people with bad credit. Lenders don’t do hard checks before lending loans to the applicant. “No hard checks” does not mean they don’t verify your financial capability of repaying a loan. They do authenticate your financial condition and after a “soft credit check,” they lend you a bad credit payday loan. Yeah! Your financial background is being reviewed by the lender but these checks won’t affect your credit score. One should choose a lender who cares about his repaying ability instead of digging him deep inside the debt’s ditch.
What is customers’ feedback about the lender?
It is our instinct; we prefer to choose the thing that already has a good reputation.
- We like to go to a restaurant that is recommended by our peers, friends, etc
- We want to listen to music that has many likes and subscribers on Soundcloud
- We prefer to watch videos that are popular on YouTube
This all is the game of reviews and feedback. Taking a loan is a serious matter so why not to check customers’ reviews on the lender’s website before making a decision.
I hope by now you are prepared enough to apply for a loan. There are many other questions and points that should be considered before taking out a loan, but having answers to all of your questions is key. Apart from all these, you have to make a firm decision about “which loan is suitable for you?” If you figure it out smartly, you will thrive brilliantly!
The Bottom Line
To keep it short and precise, if you have bad credit and need money badly to meet end needs, then a bad credit payday loan is a suitable option.
Go for this loan only if you can pay it back on time, otherwise, you are going to put yourself into a tough financial situation. This is primarily due to the fact that payday loans have notoriously high-interest rates, so you should make sure you're able to meet the repayment terms. You can also compare installment loans as an alternative to payday loans.
By now hopefully, you have developed an understanding of the upsides and downsides of bad credit payday loans. So, taking a loan is not the worst financial decision you can make just be sure to pay off your payday loans fast. Everyone has emergencies to deal with at one point or another and payday loans for bad credit can make sense if you need cash now.