There are times in life when urgent expense rears its head and catches you by surprise. Say, you need money to fix your broken car, replace your damaged kitchen sink, or pay hospital bills. These are expenses that are not included in your monthly budget, but you need to deal with them to get on with life.
Now, worse is that you don’t have extra money to cover such expenses. Your only option is to borrow money. Where do you go to borrow the cash that you urgently need?
For people who have no credit background or low credit scores, one of the best options is to take payday loans online. Take a few minutes of your time to read this post to learn more about this loan option.
What is Online Payday Loan?
An online payday loan is a short-term loan offered by online lending companies. When you get this loan, you have to agree to repay the money you borrowed on your next payday (hence, its name). There are also other names for payday loans, such as check advance loans, post-dated check loans, cash advances, or deferred deposit loans.
The annual percentage rates of online payday loans are pretty high. Typically, online lenders charge around $10 to $20 for every $100 borrowed. That’s like 400% to 520% when translated into APR.
However, your income and your credit profile will serve as the basis on how much interest the lender will charge. Before the lender releases the funds you need, you must provide a post-dated check or account withdrawal authorization.
Advantages of Online Payday Loans
- Lenient Credit Requirements. Despite the high APR of online payday loans, many people still take this loan option because of the lenient credit checks. You can see this loan advertised as “no credit check payday loans,” “online payday loans for bad credit,” or “low credit rating payday loans.”
- Simple and Convenient Loan Application. Online payday loans won’t require you to go to a lending company in person. When you can connect to the internet, you can apply for this loan. You only need to fill up the application form and provide the documents needed for the application.
- Fast Transfer of Funds. Once you’ve submitted your loan application, the lender will review your application immediately. You can get a response whether you get the loan or not just within the day of your application. If your application is approved, the funds will get transferred into your account in no time.
- Safe and Secure. Online lending companies use computer systems and data protocols to strengthen and secure the important information and privacy of applicants. They comply with the security regulations imposed by the appropriate government agencies. However, you must still be wary of bogus online lenders out there.
- Flexible Loan Amount for a Short-Term Loan. The amount you can borrow through this loan depends largely on your income. Most lenders have a set limit for the loan amount, which ranges from $50 to $1,000.
The Loan Application Process for Online Payday Loans
It’s mentioned that one of the benefits of online payday loans is their easy and simple application process. Now, let’s walk through every step of the process for you to learn how you can apply for this loan.
Step 1: Answering an Online Application Form
Look for a trusted online lender and then fill up the online application form, which you can find on its website. You need to provide your full name, home address, contact details, name of your employer, income information, and other bits of personal information. Then, submit the application form to the lender for review.
Step 2: Validation of the Information You Provide
Now, the lender has received your application, and it’s now time to ensure that the information you provided in your application is accurate and valid. Typically, there’s a machine that will validate your application form, which makes the validation faster.
Step 3: Assessment of Your Income
In this stage, the lender will assess whether you can repay the loan with the monthly income information you provided in your loan application. You have more chances to get approved if you have the financial capacity to repay the loan amount requested.
Step 4: Approval of Your Loan Application
After the verification of your personal information and assessment of your capacity to pay the loan, the lender will now send you an approval notification. Read the terms and conditions of the loan before agreeing to it.
Step 5: Transfer of Funds
Once you accepted the terms and conditions, the lender will now transfer the loan amount you’ve requested into your account. Online lending companies typically transfer funds to borrowers within the day or a few days after the approval of the loan application.
Online payday loans can be beneficial for those who need to borrow instant cash for urgent expenses. However, you need to be wary of the high APR of this loan. Make sure to find a reputable online lender and know the pros and cons of this loan option.