Life circumstances could be so unpredictable that everyone can encounter a hard situation of money shortage. It is more difficult if, in the past, the person has already skipped regular payments and cannot demonstrate a good credit history. But there is still a solution for such cases – bad credit payday loans.
According to a review of the Consumer Financial Protection Bureau (CFPB), the average payday loan borrower lives up to five months of the year in debt and pays around $520 to regularly borrow $375.
A case of emergency or unpredicted challenges can impact one’s individual budget and lead to a temporary money shortage. A payday loan could help to overcome them also if an individual demonstrates a bad credit past.
Originally the notion “payday loan” stood for a short-term loan that the user should pay back on the next payday. Today the idea of payday lending has expanded and introduces a concept of high-cost short-term credits.
Microcredit organizations offer various packages designed to support customers with weak credit backgrounds. Current laws allow payday lenders to provide high-cost installment loans for periods of up to 12 months. Interest rates, fees, and charges for bad credit loans can depend on the credit organization, but they are also capped by the authorities.
The Consumer Federation of America has analyzed twenty online payday lenders offering loans from $100 to $1500 with terms ranging from five to thirty days. The institution introduced the following findings:
- Online lenders at https://paydayloanspennsylvania.com ask for electronic access to an individual´s bank accounts. Unlike regular payday loan stores that require a paper check to guarantee payment, online lenders receive an electronic authorization. It enables them to collect money directly from borrowers’ bank accounts before other payments have been made.
- Customers fill in online applications indicating their social security numbers, bank account, and bank routing number.
- Borrowers are obliged to pay on the next payday.
- For a typical two-week loan of $500, the consumer will pay $125 or 652% APR. Analysts reviewed loan costs starting from 378% in Kansas to 780% charged by six lenders.
- Most sites offer to pay only the finance charge as a default payment plan. It does not suggest any reductions. Customers should notify the lender in advance to initiate a full payment and request withdrawal of the whole sum.
- Online lenders do not strive to get a state license and keep on the state rate limitations and loan terms. Therefore, they offer to decide for a law from states without rate caps or from foreign countries. More and more online lenders announce their exclusion from state law enforcement due to tribal sovereign immunity.
- Some online lenders advertise payday loans as a helpful tool for unexpected expenses or emergency cases. Others pay up to $110 for referrals and encourage borrowing by offering discounts on the initial loan.
- One can receive a payday loan within 24 hours after sending the application. As a rule, these loans are considered if a person cannot obtain support elsewhere.
- The online application process is uncomplicated.
- These loans are unsecured. Skipping a payment will not lead to losing valuable property but can turn out with other financial consequences.
- Consumers do not need to wait several months to repay the loan but can claim a complete return in a few weeks.
- Payday loans are suitable for borrowing relatively small amounts of money, which also keeps the charges to a minimum.
A standard online application contains three simple steps:
- Individuals are interested in getting a payday loan to fill in the form indicating the basic personal information, selecting the type of loan and sum they want to receive. It is important to study the terms, interest rate, and payment plan carefully as well as estimate whether the person would be able to repay the loan.
- The lending organization quickly checks the application and gives approval. Do not forget that there are also some eligibility requirements that the person should fulfill to be valid for the procedure. The standard criteria include the minimum age of 18, approval of employment for at least three months, $1500 monthly income, active checking account opened more than 30 days ago, and access to a phone.
- Maximum in 24 hours, money will be transferred to the account.