At one point in everyone’s lives, whether it’s to bridge expenses or make big purchases, you will typically need to take out a loan.
However, sometimes, a personal loan can be a bit difficult to apply for and get approved. This is why personal loans online were created to allow people to conveniently apply for a loan.
What Are Payday Loans Online?
First things first: a payday loan online is a kind of short-term credit ranging for only 15 to 20 days extended by a lender online based on the income and profile of the borrower.
Since it’s short-term, lenders no longer ask for many documents. Because of this, the application process typically takes less than 5 minutes. You can simply fill up the forms online, and the loan funds will be directly transferred to your bank account.
Another differentiating factor for payday loans online is how principal payments are paid. Unlike a personal loan, the principal payment will automatically be deducted from your payroll account once you get your next salary.
For instance, payday loans online at Personal Money Network will need your payroll account during the application process to implement this. On top of that, interest rates are higher since the lender takes on more risk.
What Should You Know about Payday Loans Online?
If you are still new to payday loans online, keep reading as here are some things that you should know about this type of loan:
1# Speedy and Convenient
When you encounter an emergency, a payday loan online will be perfect since you’ll get the money you need right away. As mentioned, the application process only takes around five minutes, and you will be able to quickly get your funds.
A traditional loan can’t provide this kind of convenience and speed as most traditional loans need you to submit a lot of required documents. Payday loans online will make sure that you get your money promptly.
2# Higher Probability for Approval
Payday loans online were designed to service urgent financial needs for the short-term. Because of this, lenders will only ask for a few requirements, including your age, proof of income, valid ID, and your payroll account.
Unlike personal loans, you don’t need to have good credit rating to get approval. Online payday loans no longer do credit checking. Subsequently, you don’t need to have a credit history to get approved.
However, a payday loan online won’t help you build up your credit scores. Even borrowers who have subpar credit are able to get approved for payday loans online. So, if you want to make sure to get your loans, you might want to consider payday loans online.
3# Unsecured Loan
Another advantage of payday loans online is that your loan is not secured by any kind of asset, such as a property or car. Even if you default on the loan, the lender can’t run after your assets.
Instead of getting collateral or security, lenders of payday loans online will have access to your bank account. Because of this, lenders can take you to court because of missing payments.
4# Higher Interest Rates
Of course, the convenience and leniency of payday loans online don’t come for free. Because of the higher risk that the lender takes on, payday loans online usually have extremely high interest rates compared to personal loans or credit card loans.
Contrast and compare the rates of payday salary loans, personal loans, and credit card loans to get a good idea of what you are paying for to get the convenience of payday loans.
5# Access to Your Bank Account
In order to get the funds fast, you are required to allow lenders access to your bank account to credit the amount. At the same time, you are also granting access to debit the amount you owe on the day you get your salary. You need to know that it is a bit hard to cancel the permission you’ve granted lenders to access your bank account.
In addition to that, you have to be able to manage your finances very well. You might forget that the lenders will automatically debit from your bank account.
If you do forget, the loan will just repeatedly get rolled over. This is why you have to make sure that you have money set aside in anticipation of the repayment of the payday loan online, which will be taken from your salary.
6# Hidden Charges and Fees
Before taking on a payday loan online, you have to make sure that there are no hidden charges. This is because the lender will have complete access to you bank account. If they deduct extra charges, it might be harder for you to take it back.
So, before you apply for a payday loan online, make sure you ask for a list of all the charges to prepare your finances.
Lenders of payday loans online should have a clear enumeration of all the fees and charges that you need to pay. If the lender does not have this, then it might be best to just walk away and find another lender.
7# Avoid Scams
Since this type of loan is done online, there will be many websites that will offer payday loans. However, you must beware of bogus lenders. To make sure that you won’t get scammed, you must do your research well and read reviews about the lender.
Read about the company’s history, too. Make sure that you also know all the loan products being offered. Do a thorough background check on the lender before giving any kind of information regarding your account and identity to make sure that you don’t fall into any kind of financial trap.
If your financial need is immediate and urgent, then a payday loan online can be the perfect solution for you. But while payday loans online provide a convenient way to meet immediate financial needs, make sure that you know what you’re getting into.
The information discussed above should give you an idea of what payday loans are, what it entails, what is required of you, and what you should prepare.