A payday loan is a form of short-term lending that is designed to help borrowers cover urgent or unexpected expenses until their next paycheck arrives. They are also small-dollar loans in that they often range from $50 to $1,000 with the principal plus fees due in full on your next payday, which means the repayment period is usually set between two to four weeks.
On top of that, these loans often come with high-interest rates and when paired with their short repayment periods, it’s safe to say that this form of lending is not for the faint of heart. The upside is that they are easily accessible, as you can often get instant cash from iPaydayLoans, which lists some top payday loans with instant approval.
They also don’t require you to have a good credit score to qualify, as all you need is to prove that you have a steady source of income that will allow you to make your repayments on time. Some lenders may require you to write them a postdated check for the full amount in advance but most payday lenders will typically debit your checking account automatically once the due date arrives.
What To Consider Before Borrowing Payday Loans?
While it is true that payday loans can be a boon should you ever find yourself in a tight spot financially, there are a number of important factors that you need to remain aware of. We’ve listed a few below but if you want to know more, you can always head over to iPaydayLoans and read what Matthew Du has to say about payday loans.
High interest rates
Payday loans often come with exorbitant APRs that can often make it difficult to repay the loans. Most of them even go up to the triple-digit range, so it is important that you always weigh your options before taking out these loans.
Short repayment periods
As mentioned before, payday loans typically come with a 2 to 4-week repayment term. However, this can sometimes be too short for borrowers, especially considering how high the interest rates for these loans tend to be. It is also for this reason that many payday loan borrowers end up applying for rollovers.
Payday loans often come with a lot of additional fees and costs that you have to consider, as they can often end up raising the cost of the loan significantly. Some of these fees can include prepayment fees, late payment fees, origination fees, etc. There are also rollover fees to consider if you fail to make your repayments on time and want to extend the repayment period.
Do Payday Loans Impact Your Credit?
Payday lenders do not typically conduct hard credit checks, which means that applying for one will not lower your credit score. In addition, these lenders do not usually report on-time payments to the relevant credit bureaus, so these loans also cannot help you to build up your credit rating.
However, defaulting on these loans can result in your debt being handed over to a collection agency, which is likely going to get your credit score lowered. In terms of the loan application process, payday lenders don’t rely on your credit score when giving out loans, which means that qualifying for these loans is usually pretty easy.
Instead, they will usually focus on looking at your monthly income and debt-to-income ratio to determine if you can actually afford to borrow from them. However, the increased credit risk means you should expect them to charge higher interest rates and more fees.
Is It Possible For A Payday Loan To Be Forgiven?
It’s very rare for a payday lender to write off debt because they often make a huge amount of profit from the high-interest rates that they typically charge on these loans. It is for this reason that you should never borrow a payday loan unless you are 100% confident that you can repay it on time. Otherwise, you could end up facing serious consequences that could put both your finances and credit standing at risk.
How Can I Quickly Repay My Payday Loan?
If you are not confident that you can repay your payday loan in full and on time, then you should remember that payday lenders offer rollovers. This means that you will only need to pay the required fees and the due date for the loan balance can be extended to a later date.
This should provide you with the time that you need to repay the loan but the problem is that it also increases the risk of being stuck in a cycle of bad debt. Another alternative option to consider is debt consolidation. This option involves borrowing a low-interest personal loan from elsewhere and using it to eliminate any high-interest debt that you may have like a payday loan.
These loans come with longer repayment periods and can be borrowed from banks or credit unions. However, if you have a less-than-stellar credit score, then you can use an online loan broker like iPaydayLoans to connect with a bad credit lender. The added benefit of these types of loans is that they tend to show up on your credit report. This means that making on-time repayments can potentially help you to rebuild your credit score.
How Do I Apply For Payday Loans?
Applying for payday loans is a fairly simple process and it can be conducted in one of two ways. The first is to head to a payday lender’s physical storefront in your locality and apply for funding in person. However, this process can often be rather tedious, which is why it is often better to apply online via iPaydayLoans.
The site is a credit broker service that connects potential borrowers to a network of lenders, many of whom offer a wide variety of loan products that also include payday loans. The entire process can also be carried out online, requires minimal documentation and allows you to compare multiple loan offers until you find the best possible rates and terms.
On top of that, all loan decisions are made within the same day of application and any approved funds are typically disbursed as soon as the next business day.
In this article, we’ve effectively established that payday loans are due in a short span of time, so it is safe to say that they are only ever a good idea if your financial history is solid. And even if you are confident that you can repay it, keep in mind that they are only meant to be used to cover an unexpected expense, so don’t borrow them lightly.
After all, as we have summarized they do come with a fair amount of risks, so before getting a payday loan, take some time to review your budget and look for alternative options. This can include borrowing from a bank, applying for an 0% APR credit card or even borrowing from friends and family.
If you have concluded that none of these is a viable option, then you should make sure that you find a payday lender that can offer you the best possible rates and terms before signing on the dotted line.