Quick loans, or in some instances also referred to as payday loans, are typically used by individuals looking for a fast and convenient way to access cash to pay various short term expenses. These loans have gained in popularity over the years as evidenced by the growing number of retail payday loan retail locations as well as an increasing number of websites dedicated to short-term financing. While taking out a quick loan can be helpful in paying your bills in the short term, one must be aware of the potential disadvantages in doing so as well.
What Are Quick Loans?
Quick loans are typically small, short-term, unsecured loans. The Consumer Financial Protection Bureau (CFPB), the US agency that governs the payday and quick loan industry, estimated that the average payday loan amount people usually take out is right around $400. A number of states have capped the max amount allowed to be loaned at $500 though we’ve seen a number of situations with amounts up $1,000. People who take out these short-term loans typically pay back the amount taken out over a couple weeks, sometimes just until their next payday (hence the payday moniker).
Quick Loans: Am I Eligible?
While loan eligibility requirements vary from state to state, they typically consist of the following:
- Detailed personal information: including your full name, current address, Social Security Number, phone number and valid ID.
- Income information: employer information, pay type, frequency, and amount. Some quick loan companies may require a pay stub for verification purposes.
- Banking information: checking account number and routing number to disburse the funds to you and for repayment of the loan.
What If I Have Bad Credit?
Because of the short-term nature and generally low principal amount loaned, quick loans are typically offered to people of all credit ratings, including those with bad credit. Many payday loan providers are quick tout “no credit checks”. This is definitely a positive as a hard credit check could adversely affect your credit score, something to consider when exploring this financing alternative. Either way it won’t be difficult for you to find a quick loan if you have bad credit, in fact you can see a list of the leading bad credit payday loan providers here.
How To Apply For Quick Loans?
The sheer number of payday and quick loan providers online and offline can seemingly overwhelm anyone interested. Going through and comparing the terms and conditions of each provider could take days, possibly weeks, therefore you may want to consider exploring a service that aggregates the terms and conditions of several quick loan providers to quickly determine which one is most appropriate for your situation.
Quick Loans: Terms and Fees
As we mentioned previously, quick loans typically range from several days to several weeks in length. Funds are typically transferred to your bank account via ACH within 24 hours, many times same day depending on the time of day your application is submitted. On the agreed upon maturity date, funds (principal + fee) will be disbursed back to the payday loan provider via ACH.
While each lender may vary in terms of fees charged, the general practice is a set fee amount charged per $100 of principal loaned. So you may be looking at a $15 to $30 fee per $100 loaned in some instances. You can see a list of current payday lending fees here.
Penalties For Late and/or Partial Repayment
In the event you can not pay the full amount of principal and interest by the agreed upon payment date, you may end up paying additional fees and/or incur collection activities. Therefore it is essential to review the complete loan documents provided to you by your lender before signing, and thereby agreeing to the loan terms.
If you know ahead of time you will not be able to pay back the loan by the agreed upon payment date you may be able to ask for an extension. An extension typically needs to be filed by notifying the lender within two days of the payment date. The lender will want to know exactly when it can expect payment at the time. Do note, extra fees and charges will likely be incurred by taking an extension.
Quick Loans & The Trump Administration
In mid-2016 the CFPB recommended legislation designed to limit payday and quick loan providers in regards to the amount of principal they can loan, who and how they can market their services, and total fees they can charge. These payday-lending rules have been controversial to say the least. It is expected that under the new Trump administration, many of these proposed changes will be repealed quickly along with most of the financial regulations enacted in the wake of the financial crisis of 2008. Stay tuned!
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