Each of us may find ourselves in a situation where we urgently need to borrow a few hundred dollars to cover unforeseen expenses. This is easy enough to do if you have a credit card or a good credit score because you can go to the bank or withdraw cash advances from an ATM. But if your credit score is below 600, you may find that your credit is declined. What should you do?
The fastest and easiest way to solve this problem is to go to payday lenders, who provide unsecured personal loans and do not check your credit. But at the same time, it is costly and only sometimes a safe option because there are a lot of fraudsters on the market.
To help you understand this topic better and make the right decision, we have answered all the questions related to bad credit loans in this article. Read it carefully to save your finances and not get into a debt hole.
What are Payday Loans for Bad Credit?
Payday loans are a short-term solution to your financial problems. In other words, it is an expensive loan that is granted for two to four weeks without credit checks so that it can be easily obtained even by people with a low credit score.
Most loans are under $500, and the interest rate can be as high as 800% annually or even higher. The exact terms of the loan depend on the lender and the state in which you live because payday loans are regulated by federal law.
The main advantage of this type of loan is that it’s quick and easy to get money. You can find out which offers work for you without a hard credit check and sign a contract with a lender in a few minutes online. In addition, many financial institutions transfer an online payday loan to your account the same day, so if you need money urgently, this may be the most suitable option.
If you’re in an urgent financial situation and need quick access to funds, consider exploring $255 payday loans online same day options. These loans can provide you with the much-needed cash within hours, making them a suitable choice for unexpected expenses.
How Much Does a Bad Credit Loan Cost?
The lender determines the specific price of a bad credit loan, but each state has laws that set its maximum level. In addition, it is essential to understand that the final APR and fees will depend on your credit history and the information in your credit report.
On average, you can find applications and companies that offer payday loans under the following terms:
- APR is from 6% to 35.99% for loans of $1,000 and 2-5 years.
- The APR is from 60% to 800% for loans of $100 or more until your next paycheck (2-4 weeks).
In addition, it is crucial to consider various fees, such as the mandatory origination fee of 1-6% of the loan amount. However, it is vital to know that it is best to calculate your loan costs in dollars to understand if you will pay on time. To do this, you need to:
Divide the interest rate of the loan by 12 (the number of months in a year) and multiply by the number of months you have to pay back the borrowed funds. For example, you got $500 for two months at an APR of 200%. That is, for those two months, you will pay back 200%/12*2 = 33% of the loan’s cost, which is $165. This is the price of the loan.
Eligibility Criteria for Bad Credit Loans
To get a bad credit loan, you usually need to provide the following documents:
- Proof of your identity, i.e., ID or driver’s license.
- Proof of your level of income or employment.
- Proof of your housing situation (home insurance or rental agreement).
- Social Security Number.
- Information about your existing bank account, where you get your paycheck or other regular payments.
In general, all lenders have similar requirements: borrowers must be of legal age, have a stable place to live, and preferably have a job. However, some specify a certain income level as a mandatory criterion for qualifying for a payday loan or credit score.
If you don’t suddenly qualify for most lenders, you can use platforms that collect investor bases and help get a loan for 98% of borrowers. They charge higher fees for their services but do not check your credit history or income level.
How to Find a Direct Lender for Bad Credit Near Me?
Payday lenders often operate online and have their own websites and apps so that you can borrow money from them at any minute of the day or night. However, if you want to get a payday loan offline, you can use the following plan:
- Type your query into Google and find a company that provides online and offline payday loans. It would be best if you didn’t search for such organizations simply by map or on the streets, as you will not be able to get honest reviews about them and risk falling into the hands of scammers.
- Once you have found such a company and read its reviews, find the terms of receiving money on its website. This is so that you will know approximately how much such a loan will cost, and you can compare the offers of several companies among themselves and choose the most beneficial one.
- The next step is to find out what documents you need to take with you. Read this information on the company’s website and only then go to the lender’s offline location.
We highly recommend that you go for a loan with others. Take someone with you to protect yourself from robbers or scammers.
Payday Loans vs. Credit Cards vs Personal Loans
To make it easier for you to understand where best to borrow a small amount of money if you have bad credit, we have compiled all the information in this comparison table.
| Payday loans | Credit cards | Personal loans |
| You can borrow a small amount of $100 – $1,000. | You can use a specified amount (your credit limit) repeatedly if you repay it on time. | You can borrow anywhere from $1,000 to $100,000. |
| The repayment term is short. Typically you have to return the money borrowed until your next payday. | There is no specific time when you must return the funds borrowed, but if you do it before the billing cycle, you won’t pay APR. | The repayment term may be as long as 10 or 20 years; it depends on your credit score and the amount borrowed. However, if you’re looking for a bad credit personal loan, you should expect between 2 and 5 years. |
| You’ll have to repay the loan in one payment. | The monthly payments are variable and depend on how much of the available credit limit you’ve used. | You’ll have to repay the loan in fixed monthly payments. |
| Payday loans are incredibly costly; the APR can be as high as 800%. | Credit cards usually have 5% to 30% APR. | Personal loans for bad credit often have a maximum APR of 36%. |
| Payday loans are easy to get. | Credit cards are not easy to obtain; it takes time to open such an account. | Personal loans are the most used; that’s why you can receive money in 1-5 business days. |
| You can receive a payday loan even with bad credit. | It can be challenging to open a credit card with bad credit because each bank has its credit score requirements (usually more than 650 points). | The required credit score for personal loans is 650 points and more. However, if bad credit and payday loans are prohibited in your state, you can find a lender ready to borrow money. |
Best Alternatives for Emergency Loans with Bad Credit Scores
There are many alternatives to bad credit payday loans guaranteed approval that allow you to get money quickly but without such high interest rates:
Personal loans online
You can borrow any amount of $1,000 or more online at a maximum of 36% APR if you apply to personal loan lenders. This loan is often used because you can get it for legal purposes, sometimes even to develop or create a business.
The only drawbacks to personal loans are the income requirements and mandatory employment (although there are exceptions with the latter).
Cash advance loans
Most cash advances are small loans you can take out with your credit card at almost any ATM. If you have a credit card, you can find a cash advance limit on it – this is the amount you can borrow, usually a few hundred dollars.
The advantage of this type of credit is that it has an average APR, is generally available, and allows you to get money quickly – literally in a few minutes or hours. But the main disadvantage of this method is that you will only be able to get a small amount, usually $50 – $100 at a time.
There are also many cash advance apps online that allow you to borrow money at 0% APR, but for a small monthly subscription. In them, you can get up to $250 and repay that money on your next paycheck, but again, the first time, the amount available for borrowing may be at most $50.
Online Installment loans
This is one of the most popular personal loans, and it is called this because it is paid in installments – that is, in equal, fixed payments. The terms and conditions for these loans are the same as for any other personal loan, but lenders often give them online.
In general, if banks and other financial institutions refuse to provide you with loans because of your low credit score, you can consider alternative companies that do not consider credit as a primary factor. For example, some lenders only consider the availability of official employment or sufficient income when choosing borrowers, so you can find an option that suits you.
What Can Bad Credit Loans be Used For?
Few people take out such loans to cover a trip or a non-urgent purchase because they are costly and add financial stress to life. That is why the most frequent purposes of payday loans are:
- Medical expenses.
- Repair works.
- Financial emergencies.
- Family events.
- Necessary home renovations.
- Car repairs.
- Covering the cost of a business trip.
- Purchasing or replacing essential appliances.
- Repayment of monthly installments on an existing loan.
It is crucial to remember that such loans cannot be used to create or develop a business, buy weapons, or for illegal purposes. Also, remember that payday loans online no credit check instant approval cannot be a long-term financial solution to your problems.
Advantages of Payday Loan by Paydaysay
If you suddenly find yourself in a situation of financial need, you can get a loan from PayDaySay because it’s an opportunity:
- Get money quickly. It usually takes less than an hour from registering on the app to signing a contract, and lenders send money to your bank account within one business day.
- Find out what loan terms are available to you without registering. To fill out a loan application, you’ll need to provide basic information about yourself and your Social Security number, which only takes a few minutes.
- Get money even with a bad credit score. The app allows everyone to get a loan because it connects borrowers’ applications with investors willing to lend money, even to those with bad credit.
- Don’t wait several days for a decision from lenders. Usually, reviewing your application takes a few minutes, after which you can already sign a contract with the lender and receive the funds directly into your bank account.
- Collaborate with reliable lenders. The app has hundreds of companies and financial institutions helping people in dire financial situations for years.
You can download the app for free and use it without a monthly subscription.
Local Laws on Payday Loans Online
Payday loans are the most controversial worldwide, so it is not surprising that they are banned in many states. However, it is essential to understand that laws rarely cover the online sphere, so you can get a loan like this even if it is illegal in your state, but online and only if you take all the risks.
Thirty-seven states allow payday loans, several more have no legislation that regulates them, and the remaining 19 prohibit this type of borrowing. We can look at these regulations for example:
- Alabama allows payday loans of up to $500 for 10 to 31 days and an interest rate of up to 17.5% of the amount borrowed.
- In Alaska, loans of the same size are available for 14 days at 15% of the amount borrowed.
- Payday loans are illegal in Arizona and Arkansas.
- In Iowa, you can borrow up to $500 for up to 31 days and pay up to $15 for every $100.
- You can get the same amount at the same interest rate for 60 days in Kentucky.
- In New Mexico and North Carolina, meanwhile, payday loans are banned.
- But in New Hampshire, you can borrow up to $500 for up to 30 days at an APR of 36%.
Before borrowing money, check your state’s laws on the subject.
Loan Responsibly
Payday loans for bad credit are considered the riskiest because they are expensive and designed for people in dire financial situations. They are the ones that often lead people into debt, so you should think very carefully about whether you should take out this type of loan.
Contact a credit counselor if you are in a difficult financial situation and don’t know how to get out of it. This type of service is free; non-profit financial institutions often do this. Remember that online payday loans are not a long-term financial solution, so it is worth asking for professional help to get out of a difficult situation.
