According to research conducted by the Federal Reserve on different U.S households, 44% of all respondents interviewed admitted that they could not comfortably handle a $40,000 financial emergency. This group did not have an emergency fund to fall back to and rely on installment loans to help them cover their expenses.
While it is important to always have a fallback plan in form of some savings set aside for rainy days, sometimes things get out of hand, and you just need some extra bucks to bridge you until payday. It could be an unexpected medical bill, car repair or even a debt that you want to get rid of. So what do you do if you don’t have any savings, your credit score isn’t attractive and you have an emergency? Instant loans come in handy.
Also known as payday loans, these are short-term unsecured cash advance or personal loans that offer instant help during an emergency. As the name suggests, you can apply for these loans, and receive the best payday loan amount instantly or by the next business day. Usually, the borrower is expected to pay back the full amount when his paycheck arrives.
Most direct online lenders have simplified the loan application process. You can request for the loan online and have the funds disbursed to your bank account at the comfort of your home.
To be eligible for these same day payday loans, you have to provide proof of a steady source of income from either employment or business. You don’t have to worry about your bad credit score or collateral because payday lenders don’t perform credit checks. Neither do they ask for collateral? Your post-dated check is enough security.
To qualify for online instant loans, a borrower:
The terms vary from lender to lender. Borrowers can borrow from $500 – $1000, but that will depend on their capacity to pay back. Pursuant to the California financial law, lenders can only charge an interest rate of 10% on the amount borrowed. This helps to protect borrowers from predatory lenders who are looking to take advantage of the borrowers’ vulnerability.
It is important to read and understand the lender’s loan terms before signing their forms. You’ll have to check up on hidden costs, whether your lender is able to roll over the loan or if the amount could be spread out in installments instead of paying the loan in one lump sum.
Although they are a savior when stuck, you should not rely on these loans to get you out of debt. Use instant loans only for short-term financial emergencies. Payday loans have high-interest rates and short repayment time, making them very expensive in the long run. For easy repayment, you can inquire if they offer payday loan consolidation.
Think of a borrower who depends on his/her paycheck entirely. Parting with the whole payday loan amount at once will definitely disrupt their life. This makes them borrow again to get by until payday. Before they know it, they are ensnared in a cycle of debt.