When a financial emergency hits, you may need to get your hands on cash quickly. And the best way to do that is with a quick, simple same-day loan. But can you really get a same-day loan online? And if so, are same-day loans and lenders able to offer you the safety and credibility you need in a bad credit loan?
If you’re wondering if same-day loans are really possible, we’re glad you stopped by this article. CreditNinja can help with all the info you need on the benefits and risks of getting a loan on the same day you apply. Read on to get the truth on quick loans and how to pick the best one for you.
What Is a Personal Loan?
You can use a personal loan for any purpose you see fit. Personal loans are installment loans that you repay over time with a series of regular payments. But any loan that you use for personal expenses rather than business expenses could be considered a personal loan.
When you’re shopping around for a personal loan, your credit score will play a big part in what types of loans are available to you. On the whole, a person with a good credit score has access to loans with lower interest rates and longer loan terms because they are a lower risk to the lender. Although bad credit loans online are available to people with less-than-perfect credit, their lending conditions will vary. And many times, that bad credit loan can come with many financial risks. Which is why we always recommend steering clear of payday loan lenders, title loans, and pawnshop lenders.
Today, many different types of personal loans are available online. Applying for a loan online will allow you to skip the long lines and lengthy paperwork necessary with storefront lenders.
Secured and Unsecured Loans
A personal loan can come in two forms—secured and unsecured.
A secured loan is a personal loan that requires collateral, such as a house or car.
Title loans are an example of secured loans. When you take out a secured personal loan, the lender will check to ensure you have collateral to back up your loan. The amount of money offered to you depends on your collateral and possibly your credit history.
If you default on a secured loan, the bank can take possession of your property and sell it to recover some of what you owe. Which is why title loans can be so dangerous, as losing a vehicle would make life much more difficult.
An unsecured loan is a loan that doesn’t require the borrower to put up any collateral. Instead, it relies on your credit score and income level to determine whether you should be approved.
There are a lot of examples of unsecured loans, including: personal installment loans, payday loans, student loans, and more. Without collateral to secure the loan, the lender will likely look at your income, your credit score and credit history, and other financial information to determine whether to approve you. Although some payday loan lenders may not even run a credit check at all. This is one way to gauge the credibility of a particular lender. Lenders with credibility will want to run a credit check.
Same Day Loan Examples
A same-day loan is precisely what it sounds like—a personal loan you can apply for, be approved for, and get the money all in the same day. If your bank account is empty, a quick loan can save you. However, if not appropriately managed, a quick loan can haunt your credit history for quite some time. Getting a same day loan with poor terms and interest could lead to even more financial harm in the long run.
Payday loans are a fast-access financial product that you can use to borrow money for a short time. These short-term, high-interest loans are typically smaller than many other personal loans. Payday loans have long been a resource for people who do not have access to credit cards, banks, or credit unions. And many times they’re even available to unemployed borrowers.
Payday loans generally range from $100 to $1,000, with the average borrower taking out about $375 per loan. Unlike a traditional personal loan, payday loans are sometimes no credit check loans, making them attractive to many people with bad credit. But the fact that many payday loan lenders don’t check credit is actually a red flag. They may be able to give a customer a loan on the same day, but it could be at the expense of that customer’s financial well-being.
The payday loan application process is often very fast. One can apply for online payday loans through a mobile app or in person. They are often approved the same day. Once the loan agreement is approved, the loan is sent electronically to the borrower’s bank account. They might also provide you with a check or cash the day you apply.
But just because these loans are quick and easy does not mean they are safe. Be aware of high interest rates, short repayment periods, and unfavorable loan terms. Speed and convenience may be attractive, but many payday loan lenders are hoping to take advantage of you financially.
Cons of Same Day Payday Loans
Payday loans are how many people with bad credit get the funds they need. This can make it seem like they’re much more manageable than they are. However, many other options are safer and more affordable, like peer-to-peer lending, lines of credit, or personal installment loans.
The reality is that even though they are accessible, same-day payday loans can be expensive and confusing. Unfortunately, the high-interest rates and additional fees over time can make it challenging to pay back the loan and lead to a cycle of debt. The most difficult aspect of these loans is that the principal and high interest rates are due back by the borrower’s next payday.
A payday loan works best if it is repaid in full by the due date—which is usually about two weeks after you get the cash. However, about 80% of payday loans are not repaid by the end of their term. Payday lenders then roll over the balances into new payday loans. The rollover process repeats every time the payday loan is not paid off. This compounding interest is how the typical same-day payday loan has an annual percentage rate (APR) of 300% or more.
You will ultimately have to pay back much more than what you borrowed with payday loans. Paying off such an expensive loan in only about 14 days is not easy.
Same Day Loan Alternatives
If you don’t want to deal with payday loans, that doesn’t mean you can’t find multiple lenders with options that work for you. In addition to the following options, there’s also peer-to-peer lending, lines of credit, and personal installment loans. Your credit score might be a more important factor for peer-to-peer lending or lines of credit, but there’s still a chance you could be approved.
Pulling out your credit card may not seem like the best idea if you’re in debt or unemployed. But, when you compare the overall costs, credit cards are a better option than payday loans.
On average, credit cards charge close to 16% interest per transaction. Annual credit card fees can range from $15 to $300, depending on the type of credit card you have and your credit score. On the other hand, payday loans carry an average APR of 300% or more. Additionally, they include more fees every time the loan rolls over.
Credit Card Cash Advance
Many credit cards also allow customers to take out a cash advance. That means that a cardholder can draw money from almost any ATM in the world. This option makes credit cards even faster than online payday loans! This could also be viewed as a small same day loan.
Should you go this route, remember that using your credit card is risky because the debt can rack up quickly. Learning how to manage a credit card wisely is essential. Be sure that you make a payment on your credit card every month and always pay on time.
Credit Unions and Payday Alternatives Loans (PALs)
With the changing economy, more and more people are looking for quick loans. Credit unions and payday alternative loans offer a solution to this need. They might even offer solutions for unemployed borrowers who need a same day loan.
Credit unions are not like traditional banks. Since they are non-profit organizations, they focus on providing many services to their members rather than making money. Credit union members can secure loans with lower interest rates than they might find at a commercial bank.
Payday alternative loans are quick, small-dollar loans good for meeting unanticipated expenses. Like any other credit union service, PALs are available only to members.
Then there is also the option for online payday alternative loans. Loans like these can be obtained through a lender’s website without ever leaving the house and visiting a storefront location.
Keep in mind that getting fast cash when you need it isn’t always an easy experience. And if it is easy you’ll need to make sure that it is safe. Many online loans provide same-day funding without the oppressive fees of payday loans. However, you must practice good financial habits to manage and eliminate your debt in the long run.
What is a credit score? | Consumer Financial Protection Bureau
CFPB Finds Four Out Of Five Payday Loans Are Rolled Over Or Renewed | Consumer Financial Protection Bureau.
How Much Does a Credit Card Cost? | The Balance