With the advent of the internet, loans processing is now shortened and faster. This is the result of computerization and the establishment of data banks where every stakeholder can access information because of the interconnection of numerous networks. One good example of its creation is the introduction of emergency cash advances which are now available online. These types of loans could now be facilitated in just a couple of minutes. You can have the cash that you need in less than one hour without leaving your home. Online loans are now popular in meeting urgent financial requirements. The hassle of submitting voluminous documents is now a thing of the past with the introduction of online loans. However, the cost to avail is so prohibitive that you need to do your homework before negotiating one. It may bring more financial headaches to you than solving your problems for the present time. You should handle online loans with seriousness.
In many instances, the need for cash is very urgent during an emergency. And it’s not surprising that our necessity could only be met by lenders who can act instantly through online loans. Their services are faster and their loan application and processing are simple and convenient. Who would not borrow money from these creditors that do not require hard copies of documents to support your loan application as what traditional lenders demand? In fact, your personal appearance is not also required and you can file your online application direct from the comforts of your bedroom. You can use your internet-connected personal computer or laptop to do it. And on top of that, the loan is clean, meaning you don’t need collateral to secure it. The urgency of your need and the simple, easy and convenient way to avail it are convincing factors to borrow money from this online loan facility.
It is not difficult to secure an online loan even for those people with bad credits. What is important is that you have something left on your paycheck. This is normally the deciding factor whether your cash loan gets approval or not. However, your decision to use this credit tool should not be left on how easy to raise the cash you need instantly. You should also consider the following features of online loans before making the decision that will affect your future finances. Here are some of those features which are discussed one by one.
- Easy to apply-one of the crowd-drawing feature of online payday loans for bad credit is the simple and short online application form where some personal and financial data are required to supply. The form could be accomplished in just a few minutes if you already have on hand the information like your bank account number. While you can finish the online application form easily, it is very important that what you have supplied is accurate and truthful. If you failed on this aspect, your loan application could be jeopardize.
- Smaller in amount-this kind of loan is petty as compared to regular loans. An online loan could start at $100 and could reach up to $1,500 at the most depending on the State and your capacity to pay the cash advance based on your paycheck.
- Shorter payment period-payday online loans have short duration term which normally is 14days. As the term suggest, your payment period coincides with your payday which falls on the 15th and 30th of the month. This is so because the payment for the loan is automatically deducted to your pay slip account.
- No collateral requirement-this is a clean loan that needs no security or collateral. There are some lenders who require post dated check which the borrower redeems when its due date come. However, most online payday loans do not require a check but your bank account where the loan is electronically debited from your bank account when your cash loan matures.
- High interest rate-payday online loans are well-known for having high interest rates as high as 870% in APR. The reason behind this is the small amount of the loan involved and its shorter payment terms of 14 days. Lenders argue that it would not be profitable if such type of loan would be compared to regular loans where the amounts of loans are bigger and the terms are longer. Besides, they contend that their risk is higher because of the lack of collateral to guarantee its payment.
- Debt trap loaded-if you are a borrower of payday online loan, you are opening yourself to a debt trap cycle because of the high interest it charges and difficulty to raise the fund at short notice after your loan is recoup on your pay slip. If you don’t have the fund to cover up the payment for the loan, you don’t have an option but to roll-over or renew your loan over and over again. The continuous re-availment is what they call debt trap cycle. You negotiate a new payday loan just to settle an old payday loan account.
- Faster loan proceeds releasing-no other loan can approximate the faster processing of loan application filed through online payday loans. You can receive your loan proceeds within the day you filed the loan application courtesy of the internet where your data are automatically processed. The loan proceeds is electronically deposited to your bank account which in turn could be accessed by your through the Internet also. In fact, with this procedure, you can pay your accounts through the proceeds of your online loan without leaving your office or home.
- No documentary requirement-there are aggressive lenders of online loans who can accommodate your loan request without submission of documentary requirements to back up your loan application. This is not allowed by your traditional lenders operating offline. They have to rely on hard copies of documents which they have to verify manually. It’s different when you apply for online loans. There’s no need to support your loan with various documents as long as you supplied correctly the information required on the short online loan application form.
- Credit rating not given much importance-just the justification of non-submission of supporting documents, there are online lenders who grant cash advances even to those individuals with poor credit score. It is not given much weight because of the small amount of the loan and it short duration. If you have the earning capacity as electronically validated through the internet and the lender is given the authority to debit your loan amount from your bank account, then approval of your payday loan online is not a problem.
- Difficult to liquidate-there are many borrowers who found it hard to liquidate their payday loan easily. This is primarily due to its short term of 14 days to raise the funds to tie the borrower until the next payday after his payment of his initial loan. Besides, the high interest rate being charged eats up a significant portion of his paycheck. If you are not well-prepared prior to your borrowing from payday loan lenders, then it’s really difficult to get out of it.
- It’s a temporary help-although you can find an outright assistance to meet your obligations financially during an emergency, the help is just temporary. Sooner than you expect, financial headache will come your way as brought about by your decision to borrow money from the payday loan lender.
- Not available in all States-there are around 37 States where online loans are allowed to operate. In some States, they called these lenders loan sharks and declared them illegal while others simply barred them from operating by making their operations not feasible in their communities.
- There are basic requirements-you must be a resident citizen of America and 18 years old or above. It is also required that you are gainfully employed for the past 90 days and possessed an active online bank account. Others require social security number and a driver’s license for identification purposes.
- Automatic debit to payroll account-the cash proceeds of online payday loans are electronically deposited to your bank account. Your payment on the other is also electronically debited when it falls due after 14 days. It normally coincides with your payday.
- Their collections practices are aggressive-there are States that require the issuance of a post dated check by the borrower. If that is the case, when the borrower fails to redeem the check or make good the post date check, the lender uses it to enforce collection against the former. There are instances when the lender threatens the borrower with a court suit using the un-cleared check.
- It drains the money of low-income families-another comment against payday loan is that it takes out the money supply circulating within communities of low-income borrowers. These people are the most vulnerable to this type of loan who keep on renewing their loans thus draining their cash through the high interest they pay plus the principal amount.
- It’s an alternative source of financing-during economic crisis where credit is very tight, online loans are the other option to source much needed cash to bridge every person’s financing. It’s being a clean loan and with relaxed credit rating requirement, many people find it a life saver in times of their urgent need.
- Source of help during disasters-when disaster strikes, most of the victims are in dire financial needs and payday online loans are a great help during those calamitous situations.
Many people who have experienced borrowing money from online loans and those who have not have varying opinions about online loans. There are those who advocate the use of these loans while others are opposed because of their disadvantages. However, majority among them agree that the interest charges are so high and its payment terms very short. These two factors make the online loan borrower exposed to more financial disasters if he is not prepared to handle it.