Sometimes emergencies pop up that can’t be helped, like problems with your car or needing to replace something costly. It’s not ideal to live paycheck to paycheck, but in some cases, we can’t help it. Payday loans are a quick solution to unexpected money issues. They are a way to get fast cash to cover your expenses until you get your paycheck.
We can’t all meet the criteria to get a more significant business or personal loan, but payday loans are more readily available. It may not be your first choice from our financial tips for quarantine, but if you’re stuck, it can help.
What Exactly Are Payday loans?
The purpose of payday loans is that they are short-term, fast cash for people who get stuck before their paycheck arrives. The lender usually deposits it directly to your bank account, and you must pay it back on the date that you and the lender agree upon. The typical repayment date is on your next paycheck date. The average time frame of a loan is typically around one month.
There is always an interest rate added to payday loans, so the lender has a reason to provide the credit.
What Interest Rate Can I Expect to Pay?
Your payday loan interest rate will vary depending on which lender you’re borrowing from. However, you can calculate most interest rates and compare them with an APR. Your credit score and your income are usually taken into consideration when calculating the interest rate on your payday loan. It’s typically higher the more time you need to pay back the loan.
Some payday loans calculate the interest rate daily since the point is that it is a short-term loan. In addition, there are regulations about how much of a daily rate you must pay. These rates all depend on where you live.
How Much Will I Be Able to Borrow?
The amount you can borrow depends on a few questions about you. Your credit score, affordability assessment, and your financial history will all come into the equation. The lender’s criteria will also have something to do with how much you can borrow.
In most, it’s a limit of under $1000, but again, it all depends on your history and income. The lender will work with you to provide the amount you need to borrow and set up a payment plan that you can manage.
Once the lender approves your application for a loan, they work quickly to transfer the money to your account. Therefore, there are no long processing times, which is ideal for financial emergencies.
What If I Want to Pay Back Early or Can’t Make the Payment in Time?
For early payday loans repayment, most providers will accept it at no extra charge and often less interest. This is what you should aim to do if you end up getting a loan. The sooner you pay it off, the sooner you can get back on track with your finances.
However, if you are not able to pay back the loan on time, it may put you in further financial peril. The interest will increase every day that you are late repaying.
Photo by Steve Johnson