What You Need to Know About Instant Online Payday Loans
An instant online payday loan is a short-term, unsecured loan that you can obtain immediately. These loans are designed to provide borrowers with quick cash when their paycheck is still several days away. Just like any payday loan, you can get one to fill the gaps in your budget. The main difference between an ordinary payday loan and an instant online payday loan is that you can get the money that you need in an hour or less!
What Type of Credit is an Instant Online Payday Loan?
When you want to take out a loan without securing it with any collateral, you should look for an unsecured personal loan. Collateral is any item with intrinsic value such as a vehicle, house, jewelry, and more. An example of a secured loan is a car title loan because you are taking out a loan against your vehicle. The lender can seize your vehicle if you are unable to pay for your debt. A payday loan is the best example of an unsecured loan because the loan provider only relies on the borrower’s promise to pay back the loan.
Why are Instant Online Payday Loans Quick to Get?
A payday loan from an online loan provider is easy and convenient to get because you can apply for one from the comforts of your own home. After submitting your loan request online, different online loan providers will receive your application immediately. By sending your loan application online, you can immediately find a lender that can accommodate your request for a loan without having to leave your home or office.
Is it Really Safe to Get an Instant Payday Loan Online?
A reputable online loan provider takes the security and safety of their borrowers very seriously. Their websites are encrypted to protect the information submitted by their clients. So yes, it is safe to apply for a payday loan online as long as you work with a trustworthy loan provider offering instant online payday loans.
How Much Will I Be Allowed to Borrow with An Instant Online Payday Loan?
You can only borrow small amounts with an online payday loan because these are designed to provide instant and temporary relief for unexpected and emergency expenses. In general, an instant online payday loan will get you $100 up to $1,000. It is best to borrow an amount that you need and can comfortably pay back since an instant online payday loan is an expensive form of credit.
What Should I Expect My Online Payday Loan to Cost?
A payday loan provider carries more risks than regular lenders because they lend money without requiring any capital. Instant online payday loans are more expensive because they are more convenient. The higher the risk a lender has, the more likely they will charge higher fees and rates.
In general, a payday lender charges a flat fee for a 2-week payday loan. Although this may seem like a very small amount, a payday loan is one of the most expensive short-term loans available in the market. The annual percentage rate (APR) of most credit cards is around 15% but the APR of instant online payday loans average 365%. The APR is the interest accrued every year.
If you are paying an interest fee of $15 for a $100 loan, it may seem reasonable. However, the short period to pay back the payday loan is what makes the loan very expensive. Credit cards will charge $15 for a $100 outstanding balance but the $15 interest fee is charged in one year. By obtaining a short-term loan like payday loan (payable in 2 weeks), the APR goes up to as much as 390%.
How Much Will It Cost to Rollover My Loan?
If you are unable to pay your loan on the due date, you can opt to roll over the loan. To roll over the loan means the deadline for payment will be extended. Many borrowers cannot repay their loan in two weeks or less so when the due date comes, they will rollover the loan instead.
One major drawback of rolling over your instant online payday loan is that the interest rates add up quickly. For example, if the fee to roll over a loan is $15, if you cannot pay the loan after two deadlines your rollover cost will be $30. If you roll-over the loan three times, your $100 loan will end up costing you $145.
Instant online payday loans are convenient and handy, but you should be prepared to handle the high fees associated with it. The struggle of payday loan borrowers begins when they keep on rolling over their loan until the balance balloons into unmanageable debt. If you want to take out an instant online payday loan, you should make it a goal to pay on time to avoid exorbitant fees.
Where Can I Use My Online Payday Loan?
You can use the money from an instant payday loan for whatever needs that you have, but you must be responsible for taking out these loans because of the cost associated with them. Obtaining an instant online payday loan is beneficial for individuals who are facing immediate and urgent expenses but are in between paychecks.
You can use an online payday loan for:
- Pay for medical expenses and hospital fees
- Cover unexpected expenses like car or house repairs
- Settle urgent bills and avoid penalties or overdraft fees
Do not take out a payday loan for:
- Going on a vacation
- Shopping sprees
- Unnecessary expenses
A payday loan is an expensive form of credit, therefore, you should be careful on your purpose of getting it. If you obtain a payday loan online for needless expenses, a $100 loan becomes $115 which you may have difficulty paying for if your budget does not include such pointless purchases. It is recommended to save for your vacations, shopping sprees, and other nonessential luxuries.
If you are planning to take out an online payday loan to pay for school expenses, you should consider getting a student loan instead. Students may find it challenging to pay off a payday loan which results in penalties for late payments or rollover. A student loan has significantly lower interest rates so that students will find it easier to pay back.
When you obtain an instant payday loan online, you must ensure that the following paycheck can cover your normal expenses and loan payment. You should not regularly use an instant payday loan online to cover for your everyday expenses as it can lead to more financial problems. If you are struggling financially, you should reach out to a government-approved credit counselor.
What are the Costs Involved in an Instant Online Payday Loan?
Before deciding on taking out an instant payday loan, you should take due diligence to compare the rates and fees offered by the lender. A payday loan, in general, has a 390% APR or around $15 for every $100 you borrow.
Are You Making an Informed Decision?
There is no doubt that an instant payday loan is expensive, but the fees are more reasonable than the finance charges you can incur when you are late for paying for your credit card (651% APR), reconnection fees for utilities (1,303% APR), or overdraft charges (912% APR). You should be willing to pay for the cost of an instant online payday loan before applying for one. Assess your situation very well before taking out a payday loan. With the information presented above, you will be in a better position to decide whether an instant online payday loan is the best option for you.