The payday loan is a common type of short-term loan available to people who need to cover urgent expenses. Usually characterized by high interest rates, these loans are available to anybody who can prove they have the income to cover the repayments. These extremely flexible loans empower you to meet the financial costs of day-to-day living without compromising on your quality of life.
1. Payday Loans for Everybody
Attempting to get any type of loan is a problem if you have a poor credit history. What crippled your credit rating is irrelevant, because traditional lenders won’t listen to excuses and don’t want to know. With payday loans there are no credit checks. There are no added benefits to having a better credit rating. As long as the borrower can show they can meet the repayments, a successful loan application is assured.
To get one of these loans all you need is:
- Photographic identification which shows you are above the legal age of 18, and are a US citizen.
- A US checking account.
- Proof you can pay the debt back. Practically anybody who has a regular income can apply for a payday loan successfully.
Contrary to popular belief, these loans are not purely designed for those on low incomes – they are for anyone from any background. The 2010 Payday Loan Industry Report released by the Personal Money Network brought together statistics from the previous ten years and revealed the average payday loan user was making $47,260 a year.
2. Application Period
An extremely long application process is the mark of a bank loan. If you need the money immediately, you are in trouble. With payday loans, the main advantage is that the application process only takes a few hours to complete. Since nobody has to check your credit score, there’s nothing stopping you from applying in the morning and having the money in your bank account by the afternoon, if not sooner.
Speed is essential for meeting any unexpected costs. If the washing machine breaks down just before this week’s family laundry, you can cover the price of a repair person coming in to fix your machine. There are no other financial institutions that can cover you if such a scenario occurs.
3. Mountain of Debt
The high interest is normally referred to as the downside of payday loans. In reality, it’s incredibly helpful for financial planning. Since your next payday is the deadline to settle your loan, you won’t be making any repayments on these loans into the future. Shorter term financial goals and targets are much easier to budget and manage.
The Bottom Line
Overall, payday loans act as a lifeline in the event of an emergency. Other financial institutions won’t consider anyone other than who they perceive as the “perfect borrower.” With payday loans, you aren’t penalized for needing the money immediately, or for having a poor credit history.
Simply have your identification ready, apply for your loan as early as possible to make sure you get your money the same day, and pay it back as soon as you get paid. It’s the fastest financial loan package you will ever have to deal with.
Guest post contributed by Ted Kingman on behalf of SaveMyBacon.co.nz. Ted is a freelance personal finance writer. His articles mainly appear on personal finance blogs.