You can never tell when an emergency will occur. When emergencies happen, it is usually at the time you least expect them. If you are not financially prepared, an emergency will make matters worse. Fortunately, there are payday loans that you can apply for even if you have bad credit.
What are Payday Loans?
Payday loans are very short-term cash loans that you can take against your monthly salary. The amount of money that you can take from payday loans will vary from state to state. Most states will cap the maximum amount from somewhere between $300 to $1000. As the name implies, a payday loan is meant to be repaid when you get your next paycheck.
What are the Benefits of Payday Loans?
Payday loans are useful tools to get money in dire emergencies. A borrower only needs to have a bank account and a steady stream of income to apply for a payday loan. Payday lenders will most likely approve a loan even if the borrower has bad credit ratings.
Another benefit of a payday loan is that you may get the cash instantly. Most lenders will deliver the cash to you in as little as 15 minutes at their branch or have the money electronically transferred to you if you apply online.
How do Payday Loans Work?
When you apply for a payday loan, the lender will need to see and confirm your bank account information, your identification, and your source of income. When the lender is satisfied with your documentary requirements, the lender will determine how much money you can borrow. Before getting the money, the lender will ask your permission to withdraw money from your bank on the loan’s due date, or the lender may ask you to release a post-dated check with the full repayment amount with the agreed upon due date.
Most borrowers get approved for payday loans. However, lenders will most often than not reject loan applications from the following:
• People who do not make enough money. Payday lenders will require at least $500 in net monthly income.
• People who have outstanding loans. Payday lenders will check to see if a person has existing loans from other lending institutions.
• People who have a history of bankruptcy and bounced checks.
• People who have recently been hired and people with newly opened bank accounts.
For borrowers to get approved with a payday loan, lenders will need to determine the borrower’s financial capacity is paying the loan in full after basic expenses have been removed. Suppose the borrower has enough net income left after paying for housing, food, utilities, and other basic living expenses. In that case, the lender will determine the amount of loan to be given based on the remaining net income.
Payday loans will give you cash in as little as 15 minutes
What are the Disadvantages of Payday Loans?
Because lenders take risks in giving out loans, they put in large interest rates on payday loans, which can go as high as 500 percent annually. Borrowers must make sure that the payday loan is for emergency purposes only and not develop a habit of taking out payday loans.
