Payday Loans Online: Meaning and How to Apply
Table of Contents
- What is a Payday Loan Online?
- Who Gives a Payday Loan Online?
- Online VS Offline Payday Loans
- How it Works
- Types of Payday Loans
- Pyady Loans Restrictions by States
- Who Is More Likely to Use Payday Loans?
- Why Is It Controversial?
- Debt Collection
- Before Taking a payday Loan online
- Protecting Customers
- Payday Loans and Their Beneficial Effects
What is a Payday Loan Online?
Payday loan online is a small-size short-term unsecure loan that can be given by the Internet, and is usually due after a few days. Mostly, payday loans are granted in cases whereby there is an immediate need of money, like car accidents, sudden health issues and other situations resulting in material or non-material damage, which requires immediate compensation.
They seem to be more available than traditional bank loans, because payday loan issuers are less tough on borrowers with poor credit histories. Although these loans (also known as cash advance loans) are small, they tend to charge high percentage rates.
Payday loans are regulated by laws, which are different from country to country. In some countries, payday lending is illegal.
Who Can Provide Payday Loans Online?
Payday loans online are provided by small lenders, which are quite so common in the civilized world. Any citizen can apply for a payday loan. Unlike banks, payday loan lenders do not care much about their clients’ credit history.
Online payday loans are mostly offered by Payday companies and organizations that are well sustained. All you have to do is fill a form, which consists of a few questions, mostly taking 5-10 minutes and then register it. After that, you will get your money in up to 2 days time period.
It is worth noting that Payday loans are banned in some states. Some of the well-known companies in the United States offering Payday loans online are:
Most of these loan lenders have offered less payback than others. Most payday loans can take quite a long time to be transferred into the account of the individual. It takes as good as 2-4 days, which can be a drawback if you are looking for quick solutions to solve money issues.
It is always a good idea to check with the Better Business Bureau to make sure the lender you're considering is legitimate. Another way is to contact the company and ask for their physical address and phone number. If a loan company is genuine, they'll willingly give identifying information about themselves.
Online VS Offline Payday Loans
Payday loans are available both online and offline (in-store). Some people prefer going online, while others might find it suitable to take offline loans. Below is a comparison of both.
|Easily Accessible||In-Person Payment Satisfaction|
|Convenient||Provides instant loans|
|Secure Systems, however, you must pay attention to the site in your browser||Increased Readability|
|Can be applied from the comfort of your home||Some companies don’t care about bad credit|
|You will have to either rely on the information they have online or wait for answers to the questions that you may have.||You can ask questions and get answers to face to face|
|Available 24/7, Best for emergency loans.||May not be available 24 hours a day|
|Since the transactions are in real-time and handled by computers, the chance of error is minimized.||Due to human involvement and manual entries, there is a chance of error and a delay involved as well.|
|Authenticity can be an issue; one needs to be careful.||More Authenticated.|
Despite all the technological advancements, the in-store payday loans are still a popular choice as they allow one to receive monetary transactions in person and usually on spot. At the storefront, one can get in touch with the lender and talk to them face to face regarding their queries and have them resolved directly. This proves to be very helpful if someone is not cannot decipher the information. It is also mostly opted by the people who want to stay clear of any sorts of online frauds.
Online payday loans can be attained from the comfort of one’s home. It is perfect for anyone who has trouble in traveling to a payday store. Contrary to being directly in touch with the lender like in stores, one has to submit their data online and make sure if they’re in touch with a direct lender or a broker.
While the online lender does the groundwork for you, you still have to provide them with information such as your job location and bank account.
Online payday loans allow you to apply for loans as per your comfort and has flexible timings but the in-store loans only let you request for a loan during business hours.
Rules and standards of companies that offer Payday loans may differ from each other. Some companies may take up more time in handing out the transaction; others may take less time. Likewise, there may be a company that will offer you a loan within a short period of time. Moreover, the Payday companies' interest is also different and a significant factor as well.
How it Works
Once you get an approval, you will receive cash or check.
Most payday loans are granted for 14 days.
The sum varies from $50 to $1500.
The borrower must pay back on the due date without delays. You and the lender can arrange that the borrowed sum plus fees and the percentage rate are automatically withdrawn from your bank account, deposit, debit card, etc. The availability and short term are pretty much compensated for by steep annual percentage rates.
Let's count for example:
If you have borrowed $400 loan for 2 weeks.
Don't forget about lender's fee (common fee is $15 for every $100 borrowed)
Annual percentage rate: 450%
You will need to return: $453 + 15$ fee for every $100
It means: $513
This equals an annual percentage rate (APR) of about 450%, which sounds quite extortionate as compared to bank loans with APRs averaging 20-25%.
Types of Payday Loans
Payday loans differ by the issuing procedure and payoff term. However, they have just one common goal – providing money for clients as soon as possible. Everyone is free to choose a payday loan type that suits his/her situation and budget.
You can get a loan at a payday lending store – a physical organization, where you will need to discuss matters with a lender in person. There you can get first-hand information on the amount you can count on, payoff options and understand what kind of person the lender is.
An online payday loan can be obtained quietly. You just need to visit the lender’s official websites. The procedure is very simple – just fill in a form to share information required. This option suggests that you be careful, because you do not have a tet-a-tet talk with the lender. Do a little research to ensure this lender is conscientious and trustworthy.
24-hour payday loan lenders are quite the same as most other ones. Specifically, they deposit money upon their clients’ requests within just one business day, while it takes 2 to 4 days for most payday lenders to deposit money in clients’ accounts. This is quite so great for those who urgently need a sum of money.
One-hour payday loans are even a greater option, because they give you money within just one hour since you submit your application. It is absolutely imperative that whatever information you submit, it should be accurate and true to life.
A cash advance is a kind of loan, on which you are required to pay off when you get your salary check. Because there is quite a while between the day of receipt and day of payback, cash advance lenders often charge high percentage rates and fees. Please, be sure this is something you can handle.
Military payday loans are offered to servicemen, and many lenders have separate plans for this category of clients. Usually, lent sums do not exceed 40% of a borrower’s monthly income. Because military men have a stable income, payday lenders feel more confident in them and are less reluctant to grant money to them. However, military regulation is quite so strict on those who fail to pay back on time. There have been lots of cases when these people got court marshaled and discharged from military service.
Pyady Loans Restrictions by States (according to the Law).
|State||Interest Rate||Max Loan Amount, $||Min Loan Term, days||Max Loan Term, days|
In cases whereby a borrower realizes that he/she is unable to pay off on the due date, he/she can renew/roll over the loan. Although not all payday lenders allow this, there are lots of ones that do. A rollover does not reduce the owed sum. In fact, it is nothing less than just extending the payoff period. The borrower has to pay the fee on the due date instead of paying off the whole sum. By the next due date, the owed sum will be the initial one plus the double fee. Those who have several rollovers may have to pay a much bigger sum in the end. This is one of the biggest controversies of payday loans, and many states are quite strict on rollovers.
Who Is More Likely to Use Payday Loans?
Statistically, people between 25 and 50 old use payday loans more frequently. This group embraces several categories, whose yearly income is about $40,000 or lower. These include:
- College students (not having a four year degree)
- African Americans
- Home renters
- Disabled people
- Divorced people
People, who fall under these categories, are in constant need of money. They resort to payday loans because they have to cover recurrent expenses (rent, credit card and utility bills, food, etc.) on a monthly and/or daily basis. They do not have a well-paid job because of their social status and cannot financially make it until their next paychecks. These people are more likely to use payday loans than those facing a sudden need of one: the group accounts for almost 70% of all payday loans granted in the United States.
Why Is It Controversial?
Originally, payday loans are believed to be helpful in solving people’s urgent financial needs. However, because they have high fees and APRs, even a brief delay can be the beginning of a vicious cycle of debt, which is going to be increasingly hard to break.
This has prompted many campaigners to raise public concern about payday lenders’ true intentions. They say that lenders deliberately arrange for potential debts to quickly add up. As mentioned above, payday loans attract financially vulnerable people, who are more likely to fall into the debt pit with little hope for salvation.
With the abolition by the D. Trump administration of rules that limited the number of consecutive payday loans, borrowers became more vulnerable. Many lenders do not care much about their customers’ solvency, as they would not even require them to submit documents proving that they could pay back on time.
Lenders tend to be reluctant to freeze charges for clients, who have difficulty repaying. Many chose to press on their clients to roll over and, consequently continue to spiral down into the vicious cycle (84% of those struggling to repay testified to that).
Meanwhile, borrowers do have some rights, which can pretty much help them if they get in trouble. Particularly, neither the lender nor a debt collection agency can simply take a borrower’s money or property without a court’s decision. If a borrower defaults on his/her loan and cannot repay, the lender can file a lawsuit. It is upon a court’s decision that the lender of a third party (collection agency) get a garnishment order.
Wage garnishment is a legal debt collection practice, when upon a court’s decision a sum is withdrawn from a borrower’s salary. The employer will continue to hold back the portion of money for the lender or collection agency until the debt is fully discharged. (Read about debt facts in America)
There have been lots of complaints from borrowers about collectors pressing hard and/or threatening to take money or property or use force to get borrowers to pay back. These are not legal practices, and anyone facing this attitude can seek legal help.
Before Taking a Payday Loan Online
Choosing a lender requires a bit of patience and care. Please, always check the terms and conditions prior to borrowing, because you must be sure that it is affordable for you. Check the interest rate, fees, payback period, rollover terms, etc.
Check the local legislation to ensure that the lender operates legally. Compare the fees and interests with those allowed by the law and be sure they are within the caps stated by it.
Be sure that your lender is always there, especially if you are borrowing online. You should maintain contact with the lender all the time to keep track of possible changes.
If you wish to discharge your debt as soon as possible, do not apply to a lender practicing automatic renewal. Thus you will pretty much secure yourself against falling into the vicious cycle.
Read our full list about useful payday loans tips and tricks.
The Obama administration accepted a set of rules, which was to limit the number of consecutive borrowings from a payday lender. Also, lenders were to take steps to ensure that their customers could pay on due dates. This would prevent customers from spiraling down into the debt pit.
In February 2019, the Donald Trump administration freed payday lenders from all these obligations.
Payday Loans and Their Beneficial Effects
Payday loans are not news for quite a long time already and there is good reason for this. More and more people find this service useful and convenient especially in the situation of emergency and unplanned expenses.
The number of bad credit customers is really great and they also the ones who benefit of payday loan service. Bad credit means that a bank doors are closed before you and there is hardly any change for getting a regular loan. Your credit reputation should be next to perfect for you to be able to hope for a credit. However, with payday lenders things are much simpler.
They do not care for credit scores and stuff and are ready to welcome any customers, bad credit or good credit.
The payday loan has many benefits when this financial tool is used properly.
Top 8 Benefits
- Effortless application
- Fast processing doesn’t make you nervous
- No credit check
- Easy approval
- When you don’t have the opportunity to apply to close people.
It’s hard to qualify for a bank loan. 43% of consumers applied for alternative finances because lending decisions take too long in banks. As for payday loan, it’s enough to fill out the online application to launch the procedure. It takes several minutes only.
Slow processing performed by banks drains your energy. The person can’t focus on his work. It’s all different with payday loan. Since no credit check is performed, the person doesn’t experience tiring expectation. The approval is provided fast and the person doesn’t worry over the result. He can quickly concentrate on his daily chores.
It’s possible to borrow funds online without visiting the lending store. Federal Deposit Insurance Corporation found out that 26% of borrowers preferred payday loan out of convenience and ease of application. It proves the clients want their credit needs to be met as fast as possible. They don’t want to put up with intrusive application processes.
Payday lenders try their best to meet customer demands thus making the service flexible. It works round-the-clock and suits different categories of clients. When an emergency occurs and funds are required immediately, the person doesn’t have to wait for office hours.
This is one of the biggest benefits of a payday loan for bad credit customers. They are rejected when they apply to the bank for personal loans. Being excluded from the credit system, they can always rely on payday loans. This approach is highly evaluated by many. It contributes to the popularity of this financial product.
The most valuable thing is time nowadays. So speedy service can be priceless regardless of high fee.
Payday lenders have a range of requirements the customers should comply with. But they are incredibly easy. Therefore, the applicant can be easily approved.
Visualize how the person has just moved to a new town and faced money issues. There are no close people around to give him a helping hand. But it’s always possible to rely upon payday lenders. They are always ready to offer help.
All these things taken together make payday loans highly demanded despite the cost. This is proved by the results of the survey conducted by National Survey of Payday Borrowers given below.
What are Customers’ Priorities?
Pay attention to the factors the respondents considered important when they selected a payday loan lender. Most of all they liked the rapidness, certainty of approval and simplicity of procedure.
Such surveys are conducted now and then by the lending companies offering emergency credits. They need to know what motivates the consumers and what features are preferred. Using this info, they improve the customer service considerably.
Updated: 28 Nov, 2019