Imagine that your car broke and you have to pay your children’s tuition fees. Facing these scenarios can be debilitating and before applying for payday loans online can be an option.
These days, payday lenders are not only storefront owners. There are also a lot of lenders online that are ready to give quick cash within minutes.
More on Payday Loans
A payday loan is an unsecured and short-term loan that you have to pay on your next paycheck. Since it is unsecured, you don’t have to submit collateral to get approved of the loan.
This short-term loan is also considered a cash advance because you pay it entirely on your next payday, in not more than four weeks. It is offered in a small amount, depending on your paycheck. It is designed to help you during your unexpected emergency expenses.
Who can use it?
People with low income and those who have bad credit profiles are usually the market for the loan. Those who do not pass the requirement of traditional lenders and banks are also eligible to apply.
If you have a lot of experiencing getting turned down by banks and lenders for your loan application, this is your chance to get it. However, since riskier borrowers can use it, the annual percentage rate (APR) is higher than any other loan.
Loans range between $50 and $1,000. The APR is 400 percent.
This means that you need to pay this much for the interest. It is the main reason why many people have become indebted for so many months.
How to apply for the loan?
The application for the loan online is fast and easy. It doesn’t have to take a lot of time as you can finish it in a few minutes.
- Fill up the application on the website of the lender you’re interested to apply to.
- Submit all the requirements online.
- Wait for the lender to decide. Usually, it is less than an hour.
- Once approved, you can get your cash straight into your bank account.
To repay your loan from the lender, you can issue an authorization for them to automatically withdraw from your bank account or issue a post-dated check.
The process is easier and more convenient than taking the long queues in storefront lenders. You don’t have to carry your documents because you can submit them all over the internet.
What are the requirements?
The requirements to apply for this short-term credit depend on the lender. However, most of them ask only minimum requirements. Check with them first before applying.
Below are some requirements that may be asked from you by the lender:
- Source of income. Show proof of your paycheck to guarantee that you have a source of income.
- Proof of citizenship. This is one way a lender can know your address and identity.
- Must reach 18 years of age. You can show your proof of birth as it tells the lender that you’ve reached the legal age. It signifies that you fully understand your financial obligation.
- Active bank account. It is a requirement for you because it is where they can withdraw funds automatically for your payment of the loan.
- Social Security Number or Taxpayer Identification Number. Some lenders may ask you to provide it as proof of your identity and as a security that you’ll pay your debt.
- Valid email address and phone number. During the application, everything will be done online. You’ll receive notification through your email. A phone number is also needed sot hat they can reach you in case your email fails.
How many people are using payday loans?
More and more people are using payday loans. There are 12 million American adults taking this type of loan yearly, according to a study conducted by The Pew Charitable Trusts. The same study found that people take about eight loans each year amounting to $375 per loan on average.
People are applying for these loans to storefront lenders as well as online. What people are not aware of is that they become in debt for about five months in a year. People use the loan not for emergency expenses, but for their daily living expenses.