No matter how carefully you manage your finances, cars will break down, kids will get sick and even starting a new, better job can cost money. None of these expenses is really optional, nor is it a good idea to postpone paying them until a later date.
Ideally, you’ll be able to take care of these inconveniences out of your savings, but this just isn’t always possible. Payday loans aren’t the best solution in all circumstances, but knowing that this quick and easy option is available can help you through a temporary rough patch – as long as you use the right tools to compare payday loans and find a reliable, respectable lender.
Payday Loans and How They Work
Loans can be divided into long-term and short-term categories depending on their intended repayment period. A mortgage runs over several years and is therefore called long-term, while your credit card balance is best cleared as soon as possible. Payday loans are a form of very short-term credit: the idea is usually that you pay the lender back as soon as you receive your next paycheck, hence the name. They’re one of the easiest ways to get cash quickly , even when other options aren’t open to you. As long as you have a job, most payday lenders will be willing to work with you.
We should mention, though, that payday loans have a somewhat mixed reputation – some states in the U.S.A. have outlawed them entirely. This makes it extremely important to work with a lending company you can count on, which is why using a trusted payday loans review website is essential.
Payday Loans: The Pros and Cons
A payday loan can be a very useful tool, but only if you use it as intended. You wouldn’t use a hammer to change a lightbulb, nor would you take out a cash advance if putting a purchase on your credit card is more appropriate. You should understand the following before you even start looking for quotations:
- Payday loans are very accessible. If more traditional types of credit aren’t available to you, a paycheck advance might be your best or only option. You can even do an online payday loan comparison from home at any time of the day or night, while actual approval tends to be very fast.
- These loans come with a very high interest rate. It costs money to borrow money, and even the best payday loans compare poorly to a personal loan made at a bank.
- Taking out a payday loan doesn’t affect your credit rating unless you fail to make the payment(s). On the other hand, paying it back on time won’t help you build a better score either.
- Easy credit makes it possible to get trapped in a debt cycle. Unless you’re sure that you will be able to pay off the entire amount on the agreed-upon date, interest and other charges may end up costing as much or more than the amount you borrowed originally.
What to Look for in Payday Loans’ Online Reviews
If there is such a thing as the perfect payday loan review, it’s one written by someone in circumstances identical to your own. The websites listed below are all geared towards connecting borrowers to qualified lending companies, but they each specialize in a different type of customer. Look out for the following features in order to get the best deal:
- What amounts can I borrow? – Some payday loans are for as little as $100, others may run to $5,000 or more. Using a referral service used to working with the kind of sums you need can mean getting a better interest rate. Just know that, depending on where you live, the maximum loan amount may be restricted by law.
- How will I receive the money? – Depending on the lending company, you might get the loan amount wired instantly to your bank account or have to deposit a check.
- How quickly can I access the funds? – Especially if you’re in urgent need of cash, it pays to be placed in touch with a lender that can approve your application in minutes and transfer the money the next day.
- How can I find payday loans near me? – Applying for a cash advance at a storefront in your neighborhood is rarely the way to get the best interest rate. When it comes to payday loans, online comparison tools can help you find the best terms, wherever you live.
- How can I tell if a payday loan website is a scam? – Behind every financial services website, there has to be a real company that’s subject to state and federal laws. Look them up yourself, or simply use one of the verified lenders recommended by any of the online services below.
- Would I be better off with a secured loan? – Payday loans are almost always unsecured, meaning that your ability to pay isn’t guaranteed by pledging something you own as security. This means that the lender will charge you more interest, so you might want to look into secured credit, such as a car title loan , as an alternative.
What Is Required to Apply for a Payday Loan?
One of the best things about payday loans is that paperwork is kept to a minimum. All you need to qualify for one is:
- Proof of income: you should receive about $1,000 or more per month, preferably from formal employment.
- A Social Security number: since we are talking about the U.S.A. payday loan reviews, only citizens and permanent residents over the age of 18 can be approved.
- A bank account in your name.
- Valid contact details like an email address and telephone number.
Seeing Payday Lender Comparisons in Terms of Your Credit Rating
One of the reasons people choose payday loans is that they are available to people with an unfavorable or nonexistent credit history. How exactly does this work?
Do Payday Loan Websites Check Your Credit?
Unlike traditional banks, payday loan providers don’t require you to prove that you’re able to repay the loan on time – the fact that you believe you can and earn a steady income is enough for them. Some will in fact review your credit score, even if they’re of the “no credit check” variety, to determine what kind of interest rate they’re able to offer you, but this doesn’t take the form of a “hard” credit check. Hard credit checks indicate to credit bureaus that you plan to take on more debt, which negatively affects your score.
Will a Payday Loan Affect Your Credit?
Assuming that you meet the payment deadline, not at all. Payday lenders don’t report every transaction they make to credit bureaus, so taking a payday loan will neither improve nor decrease your credit rating. If you default on your payment, however, your account will probably be referred to a collection agency, which will make your credit score take a hit.
What Is the Best Payday Loan for Bad Credit?
Most of the advisory websites in the table below will be able to refer someone with a poor credit score to one or more suitable lenders. You may not be able to negotiate an affordable interest rate in this case, though: make sure you do the math and don’t take on debt you can’t afford to repay.
Can Payday Loans Be Consolidated?
“Consolidating” debt means exchanging a high-interest loan for one that charges lower interest. Payday loans, just like credit card debt, can most certainly be consolidated if you later qualify for a better package such as a personal loan with a longer repayment period . It’s recommended that you do so the instant you are able to.
Can You Get Denied for a Payday Loan?
Being referred to a lender by one of the online payday loan comparison services listed here does not mean you’re guaranteed to be approved. Most lenders are eager to have your business, but they do sometimes turn away people who don’t meet their minimum requirements.
Can Payday Loan Websites Sue You?
A distinction has to be made here between a website that helps you to obtain the best loan, like the best payday loan reviews and advice sites we’ve selected to be featured here, and the actual lender. In the first case, you don’t sign a contract or pay a fee when you make use of them, in the second, you do enter into a formal agreement before receiving the money.
This implies that they may use collections agencies or court proceedings to recover any outstanding amount once the repayment date has expired. A judgment against you may involve a portion of your salary automatically going to the creditor and will most certainly cause your credit rating to deteriorate.
Can Payday Loans Be Included in Bankruptcy?
In legal terms, payday loans are no different from other kinds of unsecured debt and can be discharged (i.e. effectively canceled, either in part or completely) during bankruptcy proceedings. Some lenders insert a clause in their contracts stating that you are not allowed to do so, but such a statement is of precisely zero legal value.
If you are considering this route, you should be aware that there’s a difference between Chapter 7 and Chapter 13 bankruptcy; in the latter, the court will most likely institute a repayment plan you should be able to afford. Another thing to keep in mind is that loans taken out 90 days or less before filing for bankruptcy are usually not dischargeable. Bankruptcy can, therefore, help you to wipe the slate clean of a debt that has been rolled over (extended and renewed) for several months, but won’t affect recently acquired loans.
Can Payday Loans Garnish Social Security Benefits?
Creditors, including payday lenders, can apply for a garnishing order on your wages – that is, a portion off the top of your paycheck is allocated to them until the debt (and, often, any associated legal fees) has been repaid. Social Security and veterans’ benefits, however, can’t be touched in this way. This rule isn’t totally absolute, though: a bank account can indeed be garnished, though usually only when it contains more than two months’ worth of Social Security payments.
Where Can You Find Payday Loans?
Many payday loan companies operate physical offices, while others work exclusively online in order to keep their costs down and be able to reach customers on a national level. Since each lender determines their own interest rates and there can be significant differences between the terms they’re willing to offer, the best place to search for a cash advance is one of the websites that allow you to compare payday loans online based on your location and other factors.
How Can You Tell Whether a Payday Loan Company Is Legitimate?
Payday cash advance companies aren’t loan sharks. Financial service providers are governed by some fairly strict laws and are required to register with the appropriate authorities in each state in which they operate. Apart from verifying this yourself, the best thing you can do is read online reviews before doing business with any particular lender. In particular, complaints about hidden fees or too-good-to-be-true advertising should make you think twice before signing anything.
How to Go About Getting a Payday Loan
With so many options available, finding the best deal on a cash advance is often just a question of getting as many quotations as possible.
Start by taking a piece of paper and writing down how much money you need as well as, after considering your monthly budget , how much you can afford to repay. Only once these figures are firm in your mind can you start to compare payday loan offers generated by a loan partner website. These will typically ask for information such as your zip code and monthly income, after which they’ll supply you with a list of cash advance packages you should qualify for.
Making use of one of them costs nothing and takes little effort, but it may save you a great deal of money by showing you all your options in a convenient chart. It usually takes only a few minutes for one of these websites to process your request, though dealing with the actual lenders can require a little more time, particularly if you don’t have all the necessary documentation ready to hand.
What Else Should You Consider When Looking for a Payday Loan?
Financial decisions made in a rush, or without considering all available options, are usually bad ones and often turn out to be expensive in the long run. A payday loan can be a great help in getting out of a tight spot, particularly if you absolutely need some cash within hours, but it is also in a sense your last resort.
It may, for instance, be possible to request a small salary advance directly from your employer without having to pay any interest. Some of your existing creditors might be willing to wait a few days for payment if you’re proactive and just ask them nicely, while people with bad credit might find that a friend or family member is willing to co-sign a personal loan so that you can reap the advantages of a lower interest rate.
If, finally, you decide that taking out a payday loan really is your best option, just remember that all lenders aren’t similar. Some aim to build long-term relationships with their clients in a way that benefits both parties, but others are simply out to make a quick buck at your expense. Using a trusted referral service and reading reviews by those who have already gone through the process will allow you to tell the good apples from the bad.