A Guide To Understanding Same Day Loans
Same-day loans don’t often have the best reputation. Same-day lenders used to target neighbourhoods and people living paycheck to paycheck and take advantage of those in a financial bind. However, needing access to quick cash isn’t always a case of bad planning or poor savings.
Have you ever blown a tyre and needed to replace it fast? What about a time when one of your family members suffered an injury due to their job? How about the many times you uncovered an ideal business opportunity, only to be frustrated that you didn’t have access to capital at that exact moment? As an entrepreneur and investor, you know that investing takes money to make money. But it also takes seizing opportunities as they arise. To ensure you don’t miss the next unbelievable deal that comes your way, this article is a quick guide to help you understand same-day loans.
What is a same-day loan?
A same-day loan is simply a loan distributed on the day that it is approved. Same-day loans are sometimes called emergency loans or payday loans, but the essence of each is similar. These are short-term loans that typically carry a higher interest rate than a bank loan or other form of lending. Normally, same-day loans are for small amounts up to USD$2,000 (or whatever your state allows) and are required to be paid back, including fees, within four months or less. In some cases, borrowers might have to provide electronic access to their bank accounts to the lenders.
Like every commodity, you pay for convenience and speed. Applying for same-day loans is relatively effortless and can be done online from any device with an internet connection. The process is safe, reliable, legal, and you can receive your outcome and money transfer almost instantly. In addition, companies can accept applications at accessibly located kiosks or online at any time, with a dedicated customer service team during regular office hours.
What do you need to get a same-day loan?
Unlike applying for larger loans at banks, applying for a same-day loan is relatively simple. However, you will need to have specific documentation at hand. At a minimum, many financial institutions require the following information:
- Bank account details
- Credit card information
- Other personal details
However, the US Consumer Financial Protection Bureau (CFPB) has set specific regulations when getting these loans. Some lenders will require you to be at least 18 years old, must have a checking account holder, proof of income, and some valid identification. Check with your state or territory for other conditions they need lending institutions to ask their borrowers. In addition, most lenders will do a credit history check. However, same-day lenders are typically more flexible than banks or other lending institutions. They mainly favour your current ability to make the repayments rather than your complete credit history. In most cases, if you are gainfully employed, these lending institutions can approve your application.
What should you consider when getting a same-day loan?
If you consider applying for a same-day loan, it is best to look at the bigger picture. Ask yourself the following questions:
- Do I need the money right now?
- Will I be able to pay off the loan when it’s first due?
- Will I be paying more in the long run if I don’t access a same-day loan now?
- Can I borrow the money from friends or family instead?
- Is an advance on wages a possibility?
- Will my credit card offer a lower interest rate for a cash advance?
Same-day loans typically offer interest rates of approximately 20% plus associated fees. As a borrower, you very well might be able to justify this expense to take advantage of a sudden business opportunity. Sometimes an offer is too good to pass by, so having access to instant capital can make you money in the long run. Furthermore, same-day loans do come with a few risks. For one, lenders can tack on fees to your total amount when you can’t pay for the initial loan amount. Depending on the lender, they can add, at the most, USD$30 for every USD$100 borrowed by the borrower. As such, many individuals have bankrupted themselves when unable to pay off the amount they borrowed on the agreed date. This makes same-day loans one of, if not, the most costly ways to get quick cash.
A same-day loan is a convenient way to get cash fast, especially in emergencies. Some lending institutions might only request some forms of ID and require employment details, and it’s by far quicker to apply for a same-day loan than a regular loan. Nevertheless, make sure you prepare yourself to pay for the full amount, so you won’t have to pay for additional fees and put yourself in a hole. In any case, make sure you get same-day loans from accredited and trusted lending institutions.