Yes, it is possible to get a payday loan safely. A payday loan is a quick and simple way to get hundreds of dollars to cover unexpected expenses until your next payday. They can help you in a stressful financial emergency, but they are not suitable for everyone.
Unexpected emergencies cannot be avoided, and can end up costing you hundreds of dollars. You might not have that money just sitting in your account. Is a payday loan the best solution?
It has been found that many Americans who borrowed money experienced more financial benefits in the long run. 70% of those surveyed who had borrowed money in the past said it made their financial situation better compared to the 6% who said it made their situation worse.
How Do Payday Loans Work?
Payday loans are a type of short-term financing, usually due in two weeks or a month. Your lender will verify your income and bank account information to determine your ability to repay the amount that they are planning to lend you.
If your application is successful, you will receive the money in your account very quickly. This is great for people who need money now, usually to cover unexpected medical emergencies, car repairs, or overdue rent.
Once your paycheck comes, you are expected to pay the loan in full, plus some interest. Because this loan is a quick, one-off lump sum, this is not a form of financing that should be relied upon in the long-term. It exists only to help you with emergencies.
Payday loans can be obtained at a payday lender’s office on the highstreet, or online. However, it can be worth doing some checks to verify the legitimacy of your lender. Some lenders are predatory scammers who steal and sell vulnerable borrowers’ data. A little bit of research should be done to sort legitimate lenders from scammers.
How Can I Tell If A Lender Is Reputable?
Take the time to do a quick google search. Your lender should have a rating on the Chamber of Commerce or Better Business Bureau (BBB). This can help you to check whether they are a legitimate lender or someone who is out to take advantage of borrowers.
Also keep an eye out for customer reviews. Although they do not guarantee anything, you should consider a barrage of one-star reviews as a red flag.
Finally, check whether your lender has clear contact details on their website and a physical address that you could visit. While this is not a requirement, it is a good sign.
Is My Data Secure With An Online Lender?
Check the URL of your online lender’s website. If the URL begins with ‘HTTPS’ and has a padlock icon in the address bar, this shows you that your information is encrypted. This means that it is protected from hackers.
Should I Use An Online Or An In-Person Lender?
Online lenders provide faster access to cash than in person lenders. They generally have faster approval times and funding speeds, and many of them even offer to have the money in your account on the same day that you apply, although this is usually only for smaller loans of a few hundred dollars.
Online lenders are also a clear winner for people who have a low credit score or no credit history at all. This is because a lot of online lenders use alternative credit data like utility payment history to make lending decisions. This gives borrowers with lower credit scores a better chance of getting approved.
However, in-person loan applications can work better for people who are not comfortable submitting their personal applications online. Although legitimate online lenders use multiple security measures to keep their borrowers’ personal data safe, many borrowers, especially older people, can feel wary submitting their Social Security numbers online.
They also work better for people who are not rushed for time. In-person loans tend to be more time-consuming, and in-person lenders take longer to review applications, approve borrowers, and send over the funds. If you are not rushed for time and prefer a face-to-face lending experience, this could be a suitable choice.
How Do I Avoid Hidden Fees In My Payday Loan?
If you miss your payment, you will likely get hit with a late repayment fee. Ensure you have the correct amount of money by the correct deadline. Requesting an extension can not only incur a late fee but also potentially allow you to slip into a cycle of debt, relying on loans and negatively affecting your credit score going forwards.
Although this varies by lender, you will need to pay lender fees on top of the loan. This means if for instance you borrowed a $255 payday loan, you will not only pay back the $255, but also an additional fee which is usually around $15 for every $100 borrowed.
Payday loans are a great resource when going through a temporary financial squeeze. So long as you ensure that your lender is legitimate, and that you will be able to pay it back on time, then it could definitely be a useful option for you.
Justine is a full-time writer with lots of expertise and a wealth of experience in the financial world. In particular, she specializes in household income and consumer finance across the United States. Follow her articles for useful advice and top tips, guides on how to save money and lots more.