Although a payday loan is a quick and easy way to borrow money online, as with any loan, there are still lots of things worth considering before you apply.
This guide will walk you through some of the factors to take into account before you apply for your loan.
- Before taking out a loan, you should be confident that you can repay it. With average APR of around 400%, payday loans aren’t cheap, and you should only take one out if you really need it.
- You should know how much you need to borrow. In 2021, the average loan was $375, with a repayment term of two weeks.
- You should consider how long you need to borrow for. If you have an upcoming payday that will allow you to pay off your loan, you should consider a shorter repayment plan.
- You need to check whether you are eligible. If you are over 18, have an active checking account and American citizenship, and a form of income – you’re on your way!
Is a Payday Loan Right For Me?
A payday loan could be right for you if you are facing a financial struggle and cannot make it until your next paycheck. If you need a quick loan in order to pay for a car repair or a mortgage payment before your next payday then a payday loan could be a good solution.
You can even get a payday loan with a bad credit score. Many lenders and brokers work to help those who haven’t had the easiest financial past. This is our approach here at Dime Alley, where we work with a panel of lenders who are committed to helping those with imperfect credit histories.
What Should a Payday Loan Be Used For?
Payday loans are designed to assist those who have a stable income in urgent cash crises.
You might consider using one to cover a hospital or veterinary bill, get your car repaired, or fix your boiler. Whatever difficult circumstance you face, a payday loan can get you the money you need to tide you over until payday.
Our products are not designed to be used for shopping or frivolous spending and should never be used to make repayments on other loans.
What Will Happen If I Can’t Pay My Loan Back?
Before agreeing to a loan and its repayment, you should have a good idea of how you intend to pay it back. This should be one of your top considerations, as if you fail to do so, you could incur serious consequences. Not only could you be hit with additional fees and stress, but your credit record will be scarred.
A weak credit record which shows a history of defaulting on repayments could make it incredibly difficult to borrow in the future, as lenders won’t feel secure lending to you. Therefore, you should consider how you will repay your loan before taking one out.
If you think you may have trouble repaying your loan, you should talk to your potential lender about whether they would be willing to offer you an alternative repayment scheme if you encountered trouble. If they would be willing to do so, you should ask them to put this in writing for you.
Where Can I Get a Loan?
If you need a loan, there are plenty of places to find one, and this can begin with a quick online search. Many platforms, including Dime Alley, host their entire application process online, and attach no fees to applying.
When applying for a loan, you will need to provide some personal information such as your employment status and contact details in order to be considered for a loan. If you are working with a broker such as Dime Alley rather than with a direct lender, your information will be used to match you with the most suitable lender.
While banks can sometimes take weeks to decide whether to approve your application, online lenders and brokers will often work fast. Here at Dime Alley, you can instantly see whether your loan has been approved and can receive your funds in your account within one working day.
Are Payday Loans An Expensive Means Of Borrowing?
Payday loans in the USA will typically be accompanied by around 300% to 500% APR depending on a number of things, including the amount you need to borrow, how long you need it for and the rate your lender is able to provide you.
The rate your lender will provide you will be determined on your credit score, and by using a service like Dime Alley, you will be sure to get a good rate as we will find the best rate for you from a wide range of lenders.
Rates may also vary depending on whether you borrow money in Texas, or other states such as Florida or California. This is because different states have varying regulations, including how much you can borrow and how high the attached interest rates can be set at.
How Much Should I Borrow?
While it may seem tempting to request as much money as you can (which is up to $35,000 with Dime Alley), you should only be requesting the amount that you need. Loans are there for emergencies, and you should carefully consider how much you need to cover your pressing costs.
Remember that payday loans are designed for one-off emergency payments. For more significant amounts, consider an alternative loan.
Make sure you will be able to afford your loan repayments and review your income when choosing how much to borrow. Over-borrowing may make it difficult to meet repayments on time.
How Long Should I Borrow For?
How long you should borrow for rests on a couple of factors. Firstly, if you are borrowing a larger sum of money, it is reasonable to assume it will take you longer to pay back, especially as the accumulated interest payments will be higher. You have up to 60 months to pay it back, over which time you will make monthly repayments.
Secondly, how long you borrow for will be determined upon how much money you having incoming. If you have a regular and high income, you should be able to pay your loan back in a shorter period of time. If you have a more turbulent income, it may take longer.
If you are unsure of how long to agree to repayments for, you could speak to a financial adviser, who will be familiar with how to deal with circumstances like yours.
Am I Eligible For A Loan?
There is a short and simple eligibility criteria for a loan with us. If you meet these, you could apply today:
- You must be a US citizen
- You must be over the age of 18
- You must have a regular income of at least $800 (sometimes $500) a month
- You must have an active checking account for funds to be deposited into
You don’t even need to worry about your credit score; with Dime Alley, a poor credit score will not affect your chances of being approved.