Best Payday Loans for Bad Credit All You Need to Know
Are you struggling with paying for an unexpected expense and need money fast? You can think about taking out a payday loan if the amount of money you need is not that large, but you are still struggling to get that money.
A payday loan is a way to borrow usually less than $1,000 and must be paid back in a short amount of time. These types of loans tend to have very high-interest rates. It’s is called a payday loan because it is based on how much you make in one paycheck. The terms usually state that the borrowed money needs to be paid back by your next salary date.
The exact amount you can take out depends on which state you live in. Most states will let you borrow between $300 to $1,000. However, you have to check your specific state’s requirements and amounts they let you borrow. The loans are only for a small amount, so it is easier for you to pay it back with your next paycheck.
To receive a payday loan, you must provide your bank account details. If you are unable to pay in full or have not set up a payment plan with your lender, then they can start withdrawing a minimum amount directly from your account.
If you have no money in the bank account and it’s blocked, the lender might call you or send you letters to chase. If you don’t pay, there is a chance the lender will take legal actions to get their money. While taking out a payday loan should not affect your credit score, neglecting to pay it back can make it lower.
The more time you wait to pay it back, the greater the interest, and you will have to pay even more money to clear it. This can create serious debt if you are unable to pay the loan back on time because the interest rates are usually very high on a small amount of money through payday loan companies.
However, if you feel like you can pay the money back and desperately need the funds, a payday loan could be a quick and easy way to borrow.
Benefits of Payday Loans
Although payday loans have very high annual percentage rates or APR, there are some benefits to consider if you have found yourself in a tight financial situation.
One of the main bonuses is the speed of receiving the money. Sometimes, if you have all the proper information ready, you can get your borrowed funds within hours, on the same day, or the next day.
Another fantastic thing about payday loans is that there are few requirements to be able to apply and get accepted. All you need is proof of an income, a bank account, and in most states, be at least 18 years or older.
Proof of income does not mean you need a job. You can get approved if you receive unemployment checks, get money from disability or a court settlement, or any other way you get an income.
You can get a payday loan with bad credit, as long as you have proof you make enough and are able to pay it back. Taking out this loan will not hurt or build your credit score. The only way a payday loan will affect your rating is if you neglect to pay it back.
Be Careful Of:
The first risk to be aware of is the high-interest rates. In some cases, the annual percentage rate can be up to 500%, which can add up fast if you are struggling with your finances. However, some states limit the amount of interest payday loan companies can charge to 35%.
These loans are designed for only short term borrowing; if you are unable to pay on time with the interest rate, you can rack up a lot of debt in a short period of time. The quick turnaround is another risk of a payday loan because most people who are borrowing don’t have extra money to pay it back without high-interest rates having an impact.
If you already have a bad credit score, but this is the only way to get money, then you can find yourself with even more debt if you are unable to make payments. This can backfire in the future because you will always have to be paying high-interest rates on the money you borrow.
It is essential to think about these things before accepting money from a payday loan company. It should only be used for emergencies because we don’t want you to create more debt if it is unnecessary.
What Do You Need to Apply for a Payday Loan:
The requirements for a payday loan are straightforward, which is why it is such a quick way to get money. No credit check is required, and you only need these basic documents.
Proof of Income
They require this, so they know that you are able to pay off the loan within your next paycheck. You will have to provide one of the following documents; a pay stub, a copy of last year’s federal tax returns, a bank statement, your W-2, or 1099 form.
Active Checking Account
This is needed because if you don’t make payments the lender is allowed to take out the minimum amount directly out of your bank account.
This is required to prove that you are who you claim to be and if the lender needs to take legal action for repayment, then they have your identification.
18 Years Old or Older
This is required because then the money borrowed is directly your responsibility, and not the responsibility of your parents.
List of All States That Offer Payday Loans
The states in which payday loans are legal are:
- New Hampshire
- New Mexico
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- Washington, D.C.
It is prohibited in:
- New Jersey
- New York
- North Carolina
- West Virginia.
If you reside in a state that prohibits payday loans, do not worry. There are many other ways to get money quickly. You can apply for a personal loan, delay to pay bills, borrow money from a family member or friend, use your credit cards, or apply for another credit card.
The Bottom Line
Payday loans are a great way to get money fast. However, they are high risk if you know you won’t be able to pay back the loan within 30 days or less. Getting this type of loan won’t hurt or build your credit score if you pay on time.
The problem with payday loans is the high-interest rate they come with. Be careful not to take out the money you can’t repay because then you will find yourself with huge debt before you know it.
Check your state requirements, and you can apply today!