A payday loan represents a short-term loan, which enables the borrowing of a relatively small sum of money. Usually, that sum of money ought to be repaid at the nest paycheck – hence, the name. This is why this form of financing could be utterly appealing if you have some unexpected expenses coming up, your car broke up, your bills are higher than usual, so on and so forth.
Quick, Painless Application Process
As a rule of thumb, the application process for payday loans online lasts a couple of minutes. To be more specific, in roughly 15 minutes you should be done with the application process. You can see now, why this option is so appealing to many people. Nevertheless, the key to a successful application process is the collaboration with a trustworthy lender.
Nevertheless, this quick and painless application process comes at a cost. That is the high APR. In contrast with other forms of financing, the APR for payday loans online is much higher, in order to compensate for the risk. Moving on, it’s worth outlining that the terms and individual specifications for payday loans online will vary on the state in which you live. Therefore, there are no specifics that apply in all case scenarios.
How Do Payday Loans Online Differ from Other Forms of Credit?
In order to better understand what a payday loan entails, we’d like to assess the distinctions between regular loans and payday loans online. Here they are:
- Higher rates and fees – This is, without a doubt, the main peril of payday loans online. Presumably, it’s one of the reasons why most people want to stay away from this form of financing. However, the good thing is that most states in the US have specific restrictions regarding how high the APR can be. Even so, the rates and fees are still quite steep in contrast with other financing alternatives on the market. Thus, you should factor in the entire costs of this financing option before proceeding in this direction.
- Shorter loan terms – Furthermore, the second most notable distinction between payday loans and other loans lies in the duration of the financing. That’s because these loans are speciallydesigned to assist people struggling with financial difficulty. More specifically, it is less likely to apply for an online payday loan that extends beyond six months.
- Compatible with bad credit – Moreover, this is another characterizing element, which makes payday loans online appealing to people whose credit rating isn’t stellar. Nevertheless, you should still facilitate proof that you have the financial means of repaying the loan – namely a steady income.
- Smaller loan amounts – Finally, the amount of money you can borrow is smaller – ranging from $100 to $1,000. The regulations differ by the state in which you live, though.
In summary, these are the main specifications of payday loans online. The bottom-line is that this is a viable option for emergencies only. You shouldn’t make a habit out of applying for payday loans to cover your everyday expenses.
