Same day loans are a common way to get money fast today. This method of finance is growing very popular, and the main reason is that they are much easier to obtain than a regular bank loan. This is because the requirements are not nearly as stringent. All you need to do is essentially prove that you are at least 18, have a steady source of income, and also a bank account that has been open for 6-12 months. If you can show this, then you are likely to get approved.
Your credit score is not a factor.
This is because a payday loan is short term financing. In fact, a better term for it would be a cash advance. The reason is, you arerequired to pay the money back the next time you get a paycheck, and the money is basically used to hold you over until you get that money. Therefore, your paycheck is essentially used as collateral for the loan. Since you are almost 100% certain of receiving that paycheck, they do not have to worry about your financing history.
How it gets paid back
The lender will simply debit the money from your bank account the next time you get paid.
How long before you have to pay these loans back?
In most instances you must do so within 14-30 days. Basically, as soon as you get your paycheck, the money will get debited from your bank account.
Why you should be very cautious about payday loans
While these loans are thought of as an easy way to get instant money, there are hidden dangers that you must be aware of. First of all, these loans have extremely high interest charges. In most instances the fees are anywhere from 15-50% of what you took out. Then, if you are late on the payment, more interest is charged.
In some instances, people do not have enough money in their bank account to cover all the money they have to pay back. In such cases, the lender will usually tell them to renew the loan, and essentially will give them another payday loan to cover the first one. This means that now they are on the hook for even more interest, on top of what they already owe. In a lot of cases people use another payday loan to pay off the original, which gets them in further trouble.
Conclusion
Same day loans are not all evil. However, you need to be extremely cautious when taking them out, due to their expensive interest charges. Be absolutely sure that you will have the money needed to pay it back. Only once you have exhausted every other borrowing means (banks, family and friends, etc) should you apply for one of these instant loans.
