Applying for a payday loan online is a perfect alternative to conventional loans, most of which have stringent requirements that are hard to meet. Rather than performing a credit check, these loans are offered based on trust. The lender is only interested in your ability to repay the debt.
The loans can be a good option if you need short term financing to cover an emergency. Lenders also require an applicant to have a steady source of income. Typically, you may have to pay the loan on your next paycheck. In California, payday loans online are regulated by the department of business oversight.
These regulations are under the California deferred deposit transaction law which includes;
- The loan amount should not exceed $300
- The fee charged should not be more than 15% of the loan amount
- The loan term should be a maximum of 31 days
You can apply for a same day payday loan online or in-store. However, online applications are much faster and convenient. The lender will review your loan details and once you meet the requirements, the funds can be approved within one business day.
How online payday loans work
Online lenders provide payday loans with the borrower’s paycheck as security for the debt. Even if you have a poor credit score, you can still qualify for the loan. Payments are deducted directly from your bank account once you get your paycheck. In this way, the lender’s risks are reduced. One important thing that you should take note of is that payday loans online are expensive to borrow. Some of these loans can have an APR of as high as 400%.
Applying for an online payday loan
There are many lenders online who provide payday loans online for consumers who are strapped for cash. These lenders have varied requirements to qualify for funding, and their terms and conditions are also different. To be on the safe side, ensure that you shop around for a lender with favorable loan terms. Know what the lender requirements are and ensure that you meet all them before starting with the loan application process. Once you meet these requirements, it will be much easier for you to qualify for the short term loan.
Payday loan requirements
The main requirements to qualify for a payday loan include;
- You must have an active checking account
- You must provide proof of income
- You must have a valid government issues ID card
- You must be able the age of 18
After these qualifications are met, it can take at least 15 minutes to process the loan. In some circumstances, the borrower may have to write a check for the principal amount and the interest. The lender is left with this check until the loan matures.
Have a good reason to apply for a payday loan online
Payday loans can be used to cover any short term financial difficulty. There are, however, some lending companies that might ask the purpose of your loan. Online lenders are less likely to ask this question. Conventional institutions, on the other hand, may need the information. When it comes to payday loans online, ensure that you only use the funds for emergencies. As earlier stated, payday loans can be expensive, and it can even be worse if you are not in a position to pay the debt on time. Lastly, ensure that you only borrow what you can comfortably repay.
Alternative to online loans
Once you qualify for a payday loan, the lender expects you to pay the funds within 31 days. Defaulting on the loan can hurt your credit score. This means that you will not be able to qualify for affordable loans in the future. The interest rates will also increase, making it very costly to pay back the loan. Here are some alternatives to payday loans that you can consider;
Find a low-interest loan
When a loan has a lower rate of interest, it will be much easier to pay the debt. If you qualify for online installment loan, then go for it. These loans have flexible monthly payments and you may even be eligible for lower rates depending on certain factors. Just ensure that the lender does not increase your loan term.
Improve your credit score
The best way to easily qualify for low-interest loans is by improving your credit score. When your fico score is in the 739-850 range, you can also qualify for a wide range of affordable loans with flexible repayment terms.
Ask for an advance from your employer
Cash advances from employers work the same way as online payday loans. The only difference is that the prior does not come with high-interest rates and excessive fees. You should, however, remember that taking out an advance will lower your paycheck.
A payday loan online can be handy when you get pressing financial issues in the middle of the month. But before taking out the loan, try as much as possible to consider other options. Check your credit rating to find out if you qualify for affordable financing. You also should understand the pros and cons of payday loans online before submitting your application. If possible, avoid late payments since this will come with extra interest and additional fee charges.