Being responsible with money doesn’t exempt you from financial hardships. A medical emergency can zap your savings, and car problems can happen when funds are tight. Don’t get discouraged or feel like a failure if you don’t have money to meet expenses. These types of situations can affect anyone. Fortunately, payday loans are available to bridge the gap between paychecks and provide cash for emergencies.
Payday loans are a godsend when you need a short-term solution to financial troubles. These loans are beneficial in a variety of situations. Maybe you need cash for a car repair or a utility bill. Then again, maybe you’re experiencing household problems, such as a broken water heater or a broken appliance. A payday loan can put cash in your hands in a matter of hours.
How Payday Loans Differ from Personal Loans?
Payday loans are a type of personal loan, but they aren’t issued by a bank. Because payday lenders are not banks, the standards and requirements for getting a loan differ. Banks are selective and the application process weeds out a lot of applicants. Qualifying for a bank loan requires a good credit history and collateral. Payday loans are more accommodating, and getting a loan doesn’t require a perfect financial background. These loans are ideal for people with no credit and bad credit.
How to Get Approved for Payday Loans?
Using a payday loan for emergencies will require meeting basic lending guidelines. These guidelines vary by lender, but there are general standards. For example, you must be at least 18 years old to qualify for a payday loan, a U.S citizen and have no outstanding payday loans. Additionally, qualifying for a loan requires steady employment (at least 90 days) and an active bank account.
The application process is simple, and you can apply online or in-person. The payday loan company will need a copy of your driver’s license to verify your identity, a voided check and your most recent paycheck stub. There is a minimum income requirement, typically $1,000 a month. Most payday loan companies process applications in less than an hour, and if approved for a loan, they’ll deposit cash into your bank account by the next business day.
Responsible Borrowing
Because payday loans are easy to obtain, some people mistakenly apply for financing whenever they “want” extra cash. These short-term loans are designed to tie you over until payday, not finance a weekend of fun or cover the cost of nonessentials. Payday loans are expensive, with lenders charging as much as $25 to $30 per every $100. And if you’re unable to pay back the loan in two weeks, you will incur late fees and additional interest.
Given the expensive nature of payday loans, only use these loans for an emergency and when you’ve exhausted all other options. Be responsible and only borrow what you need. This keep your payday loan balance reasonable and lowers the risk of default.