For millions of Americans that face difficult situations every month to pay the bills, taking on a payday loan is the answer, particularly if they don’t have the credit to apply for other loan products through their bank.
Before you go rushing off to take out a payday loan to tackle whatever financial hardship you’re facing, here’s what you need to know about online payday loans for bad credit.
1. Payday Loans Require That You Have an Income
Payday loans are similar to getting an advance of your paycheck. For example, if you had a $1500.00 paycheck coming your way at the end of the month but you needed to get your hands on that money 2-weeks sooner, payday loans facilitate that arrangement.
Most lenders will loan you up to the amount of money that you’re going to see on your check ($1500.00 or less in the case of our example).
If you don’t make any money, your lender isn’t going to have a good idea of what an appropriate loan amount would be for you and isn’t going to feel confident in your ability to pay off your debt.
Because of that, most online payday loan lenders will not lend you money without proof that you’re actively making money.
2. Payday Loans Are Meant For Small Financial Needs
Payday loans aren’t used for large purchases like funding your kitchen remodel. Loans for expenses like that fly under the “personal loans” flag and carry more stringent credit and income requirements.
Payday loans are almost always used to get borrowers through unexpected problems that they’re facing between pay periods.
For most, it wouldn’t make sense to take out payday loans for non-urgent expenses because of the aggressive terms that they tend to carry.
3. Online Payday Loans for Bad Credit Carry Steep Interest Rates
You’re probably aware that borrowing money isn’t free. In almost all cases, lenders will impose what is called an interest rate on you.
Some interest rates for loan products can be rather low depending on your lender and your credit score. Since payday loans are targeted at people with urgent borrowing needs, interest rates tend to be higher.
Interest rates are especially high with online payday loans for bad credit since lenders are taking on additional risk giving money to a borrower that has a history of not being able to meet their payment obligations.
4. Fees Are Common With Payday Loans
Interest isn’t the only cost that your loan might carry. Fees are also commonly associated with loans, particularly payday loans.
Fees for loans are included at the discretion of your lender and can be charged for everything from missing a payment to paying off your debt too early.
It’s very important that you take the time to understand the fees that a lender you’re interested in borrowing from imposes. That way, you can manage your loan in a way that lets you minimize borrowing costs.
5. Not All Lenders Are Created Equal
One of the reasons why we love online payday loans for bad credit is that shopping for loans online gives you access to a wide variety of lenders. There are literally thousands of companies out there that are willing to give you the money that you need.
Just because there are a plethora of borrowing opportunities though doesn’t mean that they’re all good opportunities.
Many online lenders are less than reputable in the way that they present their loan products. They are intentionally vague when outlining their terms because they hope to tack on extra fees and collect extra interest from uninformed borrowers.
Never do business with a lender that you’re getting a bad feeling about.
Believe us when we say that there are many excellent lenders out there that are willing to work with bad credit borrowers. There is no point in wasting your time with lenders that are looking to take advantage of you.
6. Online Payday Loans Can Get Funded Fast
When you walk into a brick-and-mortar payday lending facility, you get to enjoy the fact that they can physically put money in your hand the same day that you request it.
What a lot of people don’t know is that online payday loan providers can do the same thing.
Online lenders routinely approve applications instantly and wire money to borrower’s accounts within an hour.
7. Defaulting on Payday Loans is Serious
At Bonsai Finance, we are massive proponents of responsible borrowing.
You should always do everything in your power to understand the terms that surround a loan that you’re taking on. You should never borrow money that you don’t think that you can pay back.
If you find yourself in a position where you’re defaulting on a payday loan you’ve taken out, you could face serious problems.
Your credit can get damaged. You could get harassed by collection agencies. You may even get asked to appear in small claims court.
Bottom line, always borrow with the intention of paying back and always get educated before accepting a loan offer.
Wrapping Up Things That You Need to Know About Payday Loans for Bad Credit
Online payday loans for bad credit are products that are growing in popularity. Before you take on one of these products, we recommend committing to memory the information that we’ve just laid out for you so you’re never caught off guard.
Are you interested in finding the perfect online payday loan? If you are — our team has you covered.
Use our free loan finding tool which will present you with tons of lenders that are willing to do business with you at the click of a button.
Start your payday loan search and get your money today by clicking here!