Emergencies are stressful. They are more worrisome when they require you to pay for a service. What happens if a tooth breaks and you do not have insurance? What do you do when you get into an accident and need a rental to get to and from work?
When you need cash fast, quick loans are tremendously helpful. You can get an advance on your paycheck or use your paycheck to secure a loan large enough to cover the current costs. However, before you rush to a local lender, there are four things you should know about payday loans.
1. Fast Application
The application for a quick loan is fairly simple. You can fill out an application in person or online. You will be asked to include your basic information, sensitive personal information, current income, and debts.
Basic information includes your name, physical address, email address, and phone number. Sensitive personal information includes your date of birth, social identification number, and bank account information. You will need to verify your income with pay stubs and financial statements. You will also need to list your outstanding debts such as student loans.
2. Cash Is Not Always Instant
As long as you submit a full application, the institutions or private lenders offering quick loans will tell you if you are approved relatively quickly. However, it may take a few hours to a few days before you receive your loan.
If a lender takes one to two days to approve your application and another two or three days to distribute the funds, you may not have the funds in time to address your emergency. You will need to ask each lender what the turnaround time is to receive your funds.
3. Higher Interest Rates
Quick loans often come with high interest rates. Lenders accept riskier applicants. They also offer cash faster than other institutions. Quick loan lenders may use the word “loan” but are often equivalent to cash advances or payday advances. These advances include various fees. The fees range between $15 and $20 per $100 loaned.
4. Small and Short-Term
You may consider applying for a payday loan to get cash fast for a non-emergency. However, due to the high fees, you will want to weigh the pros and cons of waiting for your paycheck. You should also know that a payday loan is smaller than larger long-term loans.
A payday loan is not the type of loan that you want to take out for a large project such as remodelling your home. Typically, people look for a payday loan when they have an immediate emergency that requires fast cash.