Protect Your Credit Rating with Payday Loans
Attempting to borrow money when you have a poor credit score or no score at all can be a daunting task. Banks do not offer personal loans without thorough credit checks, while most credit card companies do not provide unsecured cards unless you have a reasonable credit score. That does not mean you are out of options, as some lenders offer short term loans that do not require a credit check.
What Are Short Term Loans?
A short term loan is a financial obligation that must be paid back in a short time frame. For instance, most payday loans are due within a few weeks. If you are considering getting a payday loan in Canada, you will find that lenders stipulate the loan must be paid back with interest within two or three weeks.
One of the most significant advantages of payday or installment loans is that you do not have to go through a credit check to get one. It means that if you have no credit or a low score, you are still eligible.
There are a few requirements for payday loans, and they are as follows. You must be over 18, have a valid ID for the country where you are living, prove you have an active bank account, and show some proof of income.
Applying for Payday Loans
The application process for these short term loans is very easy. You enter your information within the online portal and you are informed of the approval decision. Most decisions are complete within minutes, as the system can check your details electronically.
There are instances where manual verification is necessary, which can delay the process for a couple of hours. If you receive immediate approval, you receive the contract in your email and have the option to digitally sign. When that process is complete, you are able to access the money in your bank account within a few hours.
If you have to go through manual verification, you could have to wait until the next business day for your money. But even when someone has to check your information, the payday loan approval process is very swift. These loans are designed to offer immediate relief to people who cannot wait a week to get the money in their hands.
Repaying Short Term Loans
Individuals who borrow money through payday loans are responsible for paying the entire principal sum, along with an agreed on interest rate. The interest rate is significantly higher than credit cards and personal loans, but it is because you are not going through a credit check.
Even with a high interest rate, such as 300%, you will find the dollar amount is not too concerning. If you are thinking about borrowing $400 through a payday loan, you should not have to pay more than $20 interest if you pay the loan back within a couple of weeks.
Most people who take out payday loans ask if they can extend the time frame for repayment. It is a valid question, as anyone who is taking out a short term loan is in a tight financial situation. The good news is that an extension of the due date is possible – but it comes with added costs.
A typical payday lender allows you to push the due date for your loan back one or two weeks. However, they may ask you to pay additional fees for that privilege. So if you take a month to pay back the $400 you borrowed, you could be looking at $40 in interest payments.
Protect Your Credit with Payday Loans
Individuals who have bad credit know they must work their way back to good standing. That process involves never being late with any payments, while continuing to pay off your existing debts.
Payday loans can help you pay all your bills on time. If you have significant bills that are due in a few days, but your next paycheck comes in two weeks, you can take out an installment loan.
Using the loan to pay your bills on time is very helpful, as it ensures your credit score does not slip even further. It also stands to reason that a payday loan fee is likely to be lower than what you would have to pay in late fees for your various bills.
Payday loans are often the only option for individuals who are not eligible for credit cards and personal loans. While they come with higher interest rates, they also offer immediate relief from financial hardship. Most lenders can have money wired into your account within hours.
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