Thursday, June 4, 2015, AM | Leave Comment
If you are like most people, it can be a long stretch from payday to payday. If you get paid bi-weekly, the last few days of waiting for your paycheck can feel like an eternity.
That is without any surprise added expenses popping up. When something unexpected happens, that adds even more stress to an already stressful situation.
Most people are living paycheck to paycheck and have no savings to fall back on when they need extra money.
These are the times when short-term lenders can be the difference in keeping their car on the road or losing their job.
Obviously, this is never a great place for anyone to be in, but when push comes to shove, there is a way for people to get the money they need quickly without a lot of hassle.
Traditional Loans Are Not for Everyone
While everyone would like to have access to more mainstream financing options, the reality is that not everyone is going to qualify.
Many situations that consumers find themselves in do not require a loan large enough to interest a conventional bank into lending.
Larger and regional banks follow a stringent application process that requires a significant amount of paperwork, proof of income, the reason the applicant is seeking the loan.
These types of loans usually take a week or two to process and applicants must have a high enough credit score to qualify.
People that have a spotty payment or employment history will have a difficult time getting approved without a co-signer that is willing to repay the loan in the event the borrower defaults.
If you do not have a qualified co-signer to sign on the loan with you, chances are your application will be denied, and you will still have to find a way to come up with the extra cash that you need to get you through to your next payday.
Short-Term Loans Fill the Gap
Today more and more people are turning to the convenience of short-term loans, also known as payday loans, to cover money shortages that happen from time to time.
Many people who have no other means of getting extra capital in a hurry found that this type of financial product is a reliable way to get up to one thousand pounds.
All they need to do is fill out a short application online at payday loan lenders that specialize in this financial service.
In many cases, the potential borrower will find out within an hour whether their loan was approved. Lenders determine loan eligibility based on the borrower’s income, their payroll schedule, and their employment history.
If your loan is approved, the funds will be electronically deposited to your bank account shortly after the loan is processed.
Applicants must provide their banking information when they fill out the initial application. This is the same account that will be used to make the repayments, so borrowers will need to make sure that their account has adequate funds to repay the principal and interest when their new account comes due.
Be Sure You Understand the Terms
It is important that anyone considering taking out a short-term loan understands the terms of the loan so they can avoid confusion later.
You can expect that you will pay a high price for the convenience of taking out a payday loan.
Late repayments can cause you serious money problems.
If you take out this kind of loan, the best advice is to pay it back as quickly, if not sooner than you can.
The annualized interest on a loan like this can be upwards of 292%, or .8% daily. More fees can be added if you miss a payment or you are late.
When you take the money, you agree to all the terms that go with it, including giving the lender permission to automatically withdraw money from the bank account the loan was deposited into.
If your account does not have enough funds to cover the payment, your bank may assess overdraft or other fees that can put you further behind.
Unfortunately for the borrower, if this happens there is very little that anyone at the bank will be able to do for you because it would have been set up as an automatic payment when the loan was originally deposited into your account.
Some lenders may allow consumers to pay back their loan earlier than the original repayment agreement, so if you take out a short-term loan and you come into some extra cash, it might be a smart idea to pay back the loan as quickly as possible.
Chances are paying early will not cut the amount of interest you owe, but this may vary by lender. Check your terms for the clause on early repayment for more details.
Quick Money in a Pinch
When you are in a cash pinch, payday loans are there to help get you through the immediate need for cash.
If you have to choose between fixing your car and losing your job, chances are you will want to keep the job and pay for the repair.
Almost no one can afford to lose their source of income over a temporary setback in their daily transportation.
The truth is, short-term loans can come in handy when you do not have a lot of other quick financing options available.
While they are by no means a perfect solution, they are a way for under-banked or people with little or no credit to be able to get access to funds quickly with very few questions asked.
Since the entire process is completed online and deposits are made electronically, potential borrowers do not even need to leave the comfort of their own homes to find out if they qualify for the loan.
You will never have to worry about the embarrassment of being denied a short-term loan by a person with a stern face, as you will be notified electronically of the status of your application.
If you are approved, you can expect to have your cash loan by 10 AM the next day. Borrowers can choose a repayment plan of three to six months, based on their ability to repay.