Most individuals turn to payday loans as a fast and convenient way of getting spare cash before they get to the next payday. Payday loans can be of great help in times of emergencies, and if you have a poor credit score. But note you should not make them an everyday thing; you should only opt of these loans if you don’t have an alternative. Below are some facts about payday loans.
Your Credit Score Doesn’t Matter
Most payday loan lenders hardly mind your credit score. This has made these loans attractive to most lenders. If you apply for conventional loans, your credit score must be evaluated before it’s approved. Most payday loan lenders will look at your credit history, but they will not use this information to deny you a loan.
Most payday loan lenders target middle and low-income earners. It’s surprising to find that most of their offices are concentrated in these neighborhoods. In a community where the average income is below $2,000, these individuals are more likely to apply for a payday loan once or several times in a month when compared to those living in high-end neighborhoods.
Online Application Process
Most payday loan lenders prefer their client to submit applications online. You don’t have to visit a physical office to get your loan approved. This is one of the main advantages of this loan. The lending rules are relaxed, and the application and approval process is fast. You only need necessary information such as your social security number and the loan amount before making your application.
Renewal and Rolling Over Rates Are High
Compared to traditional loans, payday loans have very high rates of renewal and loans being rolled over to the next lending period. These rates are as high as 80% in some states. It’s also surprising that the lenders aren’t worried about these trends; they actually target an individual who will renew their loans since they will become regular customers. According to information from the Consumer Financial Protection Bureau (CFPB) Indicate that only around 15% of payday loan borrowers pay their loan without re-borrowing.
Payday Loans are Ideal for Emergencies
If you are in an urgent need for cash, then you can apply for a payday loan. These loans are suitable for sorting out emergency bills since they attract high-interest rates. If you have an urgent medical bill, home repair, or any other emergency, you can get money fast by applying for a payday loan. You won’t wait for long before getting the cash. This may not be the case with conventional loans.