We will try to avoid to include personal judgments and prejudices and explain plainly what are the facts about pay day loans. Let’s begin with the most controversial topic when it comes to pay day loans: The interest rate. In order to avoid boring the reader with different interest rate definitions and comparisons, let’s agree that when we talk about interest rate, we mean the APR which includes the interest rate and most other fees and loan costs.
The Interest Rate
As promised we will avoid judgments while still pointing out facts. We will also avoid numbers since there are too many differences between lenders. Truth is that the interest rate charged for Pay Day Loans is HIGH. Higher than home loans, home equity loans, and generally speaking higher than all other personal loans, either secured or unsecured.
The interest rate charged for Pay Day Loans is (only with some exceptions) always higher than the interest rate charged for credit card unpaid balances. Summing up, Pay Day loans are probably the most expensive financial product in terms of interest rate with some (but very few) exceptions.
Time for Approval
Pay Day Loans are approved FAST. Moreover, they are probably the loan product with the shortest approval period of the market. Most Pay Day Loans are approved within 24 business Hs. There is no point of comparison due to the loan’s characteristics but they are still the type of loan with the fastest approval process.
The Approval Ratio of Pay Day Loans is HIGH. It is higher than all other kind of loans and credit card products. Can people with Bad Credit get approved for Pay Day Loans? Provided they meet the loan requirements that have nothing to do with credit score or history, the answer is YES. People with Bad Credit, No Credit or even Bankruptcy can get approved for a Pay Day Loan just like someone with Perfect Credit.
The commonly heard statement that Pay Day Loans have “No Requirements” is FALSE. There is no such thing as “No Requirements” in the finance industry. Pay Day Loans have No Credit Requirements but still, there are requirements you need to meet in order to get approved. Pay Day Loans require that you show proof of a steady job (usually two years with the same employer) and that you possess a bank account. No Bank account and no job or other source of income implies that you’ll get declined.
Paperwork or No Paperwork?
This is a tricky question, online lenders claim they provide loans with no paperwork or almost no paperwork. If by that they mean that there are actually no forms in paper to be filled, their claim can be considered to be TRUE. However, you’ll have to fill online forms and if you resort to a lender that doesn’t accept online applications you’ll have to fill paper forms and sign them all the same.
We hope all this information helps you to arrive to an independent opinion about Pay Day Loans. We won’t tell you weather they are a good financial product or not or weather they can solve financial problems or aggravate them. We will leave those questions for you.